Don’t attempt to sell the business yourself. Consider a broker who specializes in your area & industry. Valuation, financial statements, preparation of the business for sale, negotiating various details, and closing the deal are all crucial components to a successful sale of your business. Each phase requires a different set of skills and experience that a qualified business broker can provide.
Reasons for selling a business
- Divorce, settlement
- Partners decide to dissolve
- Death or disability
- Retirement, no heir
- Change of scenery – risk, challenge, stress, fun
- Lack of working capital to continue
- Needs a new approach or skills
Best time to sell?
- Timing is crucial – strong sales, growth, profits
- Other factors, competition, economy, rates, laws, finance, change
Why use a broker
- Experience
- Confidentiality
- Legal considerations
- Accounting considerations
- Tax considerations
- Professional relationships
- Qualified Buyers database
- Screen Buyers on your behalf, saving you time and money
Who are you selling to
- An individual – faster, but limited cash
- A business – deeper pockets, but takes longer
So if you are considering an M&A
- Clean up balance sheet
- Drop poor performing products
- No insider deals (ie renting from family)
- Trim fringe benefits
- Tax affairs in order
- Have audited financial ready
Sometimes the best thing to do is to sell everything, pay your creditors and employees and walk away – especially if the business is failing, of low value or has no value without you running it.
Find the value
- Cash flow is king – especially for small businesses
- Property ownership, IP, processes or trade secrets
- Dominate a market, no matter how small
- Goodwill – ie distribution network or reputation
- Balance sheet = worth = assets minus liabilities
When selling
- Don’t tell everyone – especially employees, customers & suppliers
- Get legal advice – sellers trust buyers with large offers too easily
- Advertise through a broker – to save you both time and money
Want to start getting your affairs in order? A Business plan template is a great place to start. Consider completing the below 12-step business plan to the best of your ability and supplement with attached documents as required.
1. Start with the contact details
- Legal entity name
- Registration number
- Trading name
- Physical address
- Postal address
- Website address
- Email address
- Telephone number
- Mobile number
- Contact person
2. Executive Summary
- Elevator pitch
- Business concept – nature of activities
- Financial – current & projected turnover
- Age of business
3. General Company Information
- Ownership – name, age, gender, %, contribution, ID#
- Vision and mission statement
- SWOT – strengths, weaknesses, opportunities, threats
- Industry – description
- Debtors – days, terms, % credit sales, provision
- Creditors – accounts payable
- If insured – company, for, premium, risks covered
4. Opportunity analysis
- Where is the gap in the market?
- What created this gap?
- How was it identified?
- How will it be filled?
5. Market analysis
- What is the size of the total market?
- How fast is it growing?
- What % of market share will you have (if a major player)
- What market trends are there –
- Consumer preferences
- Demographic shifts
- Product development
6. Strategy
- Focus on broad market or specific niche?
- How will the business succeed?
- How will you create a unique position, with different activities?
- How do you differ from your competition?
7. Management & Organisation
- CV of founders
- CV of management
- List any critical/unique skills
- Number of employees
- Details & demographics for the latter
8. Marketing Plan
- Product/service description
- Why is it valuable to customers
- Who is the target market, detailed
- Positioning, how should the product be perceived by customers
- Pricing strategy and price points
- Sales and distribution channels
- Promotional strategy incl.PR, advertising and viral campaigns
9. Financial Plan
- Startup cost requirement
- Working capital requirement
- 1-year (monthly) PNL projection
- 3-years (quarterly) PNL projection
- 1-year (monthly) cash-flow projection
- 3-years (quarterly) cash-flow projection
- Projected balance sheet at start and end of years 1,2,3
- Break-even calculation
- Gross profit calculation
- Asset register
10. Funding requirements
- Reasons why funding is needed
- Ownership contributions
- Monies owed to creditors
- Surety-ship agreements
- Asset financing break-down & statements
- Ie institution, period, remain, interest rate, installment
11. Be sure to attache the following appendices
- Brochures & business cards
- Advertising materials
- Industry studies
- Blueprints and plans
- Maps and photos of location
- Product information and pictures
- News & press releases
- Magazine and online articles
- List of assets owned or to be purchased
- Copies of leases
- Copies of contracts
- Copies of company documents
- Letters of support from future customers
12. Finance-specific attachments
- Detailed financial projections
- Bank statements, 12 months
- Financial statements, 3 years
- Management statements, 12 months
- Tax returns, 5 years
- Bond statements, all properties
- Rental agreements