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Selling a small business

If you want a decent price for your small business, there is much more to the sale than advertising it on a few websites when you’re ready to get out. Rather, to maximise the selling price of your business, you must begin the sales process much earlier.

Getting the best price for your business essentially comes down to three key phases that you must implement throughout the development of your business.

1. The planning phase

It doesn’t matter how big or small your business is, you really need to plan the exit and have yourself prepared for the sales process. Even if the buyer of your operation is essentially buying a job, size is relative and for that person it could still be a massive investment in their future. So you can never underestimate the emphasis on getting your business and documentation in order before you hit the market. Even if your business is a relatively simple operation with little documentation, the more information you can put together for a buyer, the more comfortable the buyer will feel, the larger the buyer pool and the more value you will extract from your operation.

2. Marketing and dealing with buyers

Being realistic with your price, marketing the sale properly and you will attract a good number of buyers and there are a lot of people in the market at the bottom end. This also means that unless you have a broker managing these buyers you will be dealing with a lot of headaches.

Get the price or marketing wrong and you will be one of the industry statistics, with businesses typically taking an average of 12 months to sell and only 1 in 3 actually finalising a deal. This can be draining on an owner, even if a broker is managing the sale and can result in a downturn in profitability, resulting in further drop in value.

The good news? LINK’s brokers are all trained to prepare, price, market and negotiate sales in the best practice methods, resulting in much shorter time on market and clearance rates.

Any time you sell a business, you want to show a positive trajectory. That is, you don't want to go to market with a business that's been losing market share, customers, revenue, or worse still, losing profit. It paints an ugly picture.
You want to paint a positive picture and the best way to do that is to sell your business during an upturn. That’s why it’s so important to engage a business broker.
Considering it takes an average of six to 12 months to sell a business, your business broker will be on hand to entertain potential buyers while you stay focused on maintaining a growth phase throughout the selling period. 

Quite often we see business owners who go to market or entertain a buyer on their own, and in doing so lose their focus on the business, which sends it into a downturn when they need to be showing an upturn.

3. Contracts and Handover

It’s important to continue your focus on the business operations during this stage and handover a business that is substantially the same as was offered for sale. Sometimes it can take a couple months from signing of contracts until settlement and getting paid, so it’s important to remain focused on the business operations. From experience, it demoralising to work on the sale of your business for six months only for the deal to fall over. So keep your focus during this time.

 

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Mark Jason
LINK Australia, Managing Director