A key to business is having an exit strategy in mind when you are starting out. With this in mind, if your end strategy is to sell your business, when you are making decision along the way it will be with the end in mind so by the time you are asking this question the hard work is done.
Unfortunately for many business owners this is not how they set up their business. Therefore to prepare a business for sale it is different for different owners. Here are a few key areas of focus:
Focus 1: Can your business be sold?
The main question to answer is can the business operate without you?
Would your customers still deal with the business if you were not there?
Would your suppliers supply to the business if you were not there?
Focus 2: What are you selling?
I know you may be saying a business DEH!!! But this question is not as silly as first thought:
1. How healthy is your financial position?
Will the purchaser be able to make money from the business i.e. take a market value wage and pay interest on a loan the need to take out to purchase the business? Many businesses I see do not pay themselves a market value wage. Older businesses have operated debt free for many years so when they add debt into the equation there is no profit.
2. Are there contracts or agreements in place with clients and suppliers?
3. If your business is a location specific business (i.e. a café) what are the lease terms, is your lease coming to an end?
4. Is your product or service going to exist in 2 years’ time?
We see this with the Video Hire shop industry where it is a declining industry and as such a difficult business to now sell.
Once you have determined you have a saleable business the next key is to look at what is the value of your business. Please contact Melanie or Renee in the office to realise the value of your business.