The Art of Preparing Your Small Business for Sale

Paul Weber, July 9, 2015

For sale sign on office chairIdeally, preparing your small business for sale began the moment you decided to start it. Realistically, small business owners are too wrapped up in the company launch to put much thought into the eventual sale. At minimum, staging your business for sale should begin several months, preferably years, in advance. There is much groundwork to cover in making your business attractive to potential buyers.

Future buyers want to see that everything about your business is turnkey ready, meaning they could walk in and the company is up and running as usual the same day with very few, if any, hiccups. That means you want to focus on areas like:

  • Ensuring your inventory is up to date
  • Making sure all equipment is functioning properly
  • Having knowledgeable employees who can help and are willing to acclimate the new owner(s)
  • Building and maintaining good relationships with your suppliers
  • Ensuring you have sound business processes in place
  • Having loyal customers and a strong business following

Time to invest some valuable time in your small business’s records, financials, brand and more.

Invest your time on the business aspects tied to the upkeep of your company and its records and financial statements. These are one of the strongest buying points that any potential buyer will want to review.

Perform an objective brand analysis. A common mistake among small business owners is to tie the company brand too closely to his or her name. Your business has to stand alone on its own merit and reputation (not your name’s) in order to successfully and profitably sell it. Potential buyers have to see the business carrying on without you there. They must feel secure in the fact that your customers will stay with the business name and brand once you’re gone. If you find you need to separate yourself from the company brand, start doing so sooner versus later.

As the song goes… make certain “Everything’s up to date in Kansas City.”

That is, at least as far as your company is concerned. This includes:

  • DOCUMENTATION:   If patents and trademarks are linked to your brand, you may want to speak to an intellectual property rights attorney regarding royalties or other legalities.
  • EQUIPMENT:   Anything that’s broken should be fixed or removed so your company reflects it’s been cared for instead of being treating as a storage facility or a junkyard.
  • INVENTORY:   Make sure what’s in stock is what’s reflected in your books. Discard things that don’t sell, which could be a potential tax write off.
  • CUSTOMER LISTS:   Do an accurate count of your customers, past and present. Accuracy is key because while you may have thousands of “followers” on social media, how many of them are contributing to your sales?
  • RECORDS & FILES:   Review and update current sales reports, job descriptions, salary information, employee records and operations manuals.
  • FINANCIALS:   Run current reports or speak to your accountant about running them because you, a broker, buyers and other interested parties will need them for review.
  • ENVIRONMENT:   Fresh paint and modern furniture can make your office an aesthetically appealing place to be and work.
  • PAST DEBTS:   Settle any debts or IRS-related issues and resolve any employee issues, back pay discrepancies, etc. New owners will not want to be saddled with past problems.
  • CLEAN UP:   Environmental issues can become a hurdle for selling a small business in certain industries. Properly recycle or dispose of any hazardous waste.

As a small business owner, you’ve no doubt invested a lot of equity – both sweat and financial – into making your company a success. By investing the same amount of energy at the time you decide to sell your business, you’ll be better positioned to provide potential buyers exactly what they want and need to see. In the end, a well established and well run company will be more apt to sell faster and closer to your asking price. Not to mention, all of your hard work from the early years and at the time of sale will pay off.

A strategic planning partner.

One thing that separates EAG from other KC advertising agencies is that our leadership is heavily involved in local entrepreneurial programs, logging hundreds of hours in front of business owners in classrooms and lecture halls. With many years of strategic planning experience, our view of small business marketing includes always keeping our eyes on your end goal.

Interested in learning more about the art of preparing your small business for sale? Let’s talk…

 

One Response

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