What to Do When You’re Ready to Sell Your Business
Every business owner has unique goals for their business. Some want to stay around forever. Others want their work to become famous. And many hope to cash out for a small fortune. Whatever your goals, if you are ready to sell your company, that’s not something that can happen overnight. A sale requires some planning. Here are the steps you need to take.
Begin by Documenting Everything
A buyer is taking a huge risk, and has no reason to take you at your word. So most won’t consider purchasing a business until you have thoroughly documented everything. This documentation can also expedite the transaction once it gets underway. The documentation you need in place includes:
- Financials, including balance sheets, profit and loss statements, lists of assets, tax returns, and forecasts.
- Operations processes, including details about how and you do everything.
- An organizational structure chart.
Have a Growth Plan in Place
A business that can turn on its spigot to access more value is much more valuable to investors. To achieve this, you need a clear and realistic plan for growth. Buyers want to know you have a functional process in place that will allow your organization to continue growing even in your absence. To optimize sale value, you must show growth and scalability, as well as a plan to achieve both. Make it easy for your buyer to picture themselves at the helm of a growing, thriving company.
Be Prepared to Explain it All
Your customers, employees, and other key stakeholders are going to want to know why you are selling the business. Ensure they won’t jump ship by developing a comms plan that is honest, upbeat, and gives stakeholders an incentive to stay on. You need to be able to guarantee a high customer retention rate and a well-prepared staff. So begin testing comms strategies now, then be prepared to answer questions from day one.
You should also begin transitioning yourself out of daily operations now. A company that is too dependent on its owner is a company that is high risk for buyers. Don’t destroy value because you want your company to be dependent on you.
Consider Staying on For at Least a Year
Your role in your company does not necessarily end at closing. You can help generate further value by staying on after the sale. Most buyers want the owner to stick around either as a paid member of the staff or a consultant. In some cases, you may even negotiate an earnout, whereby you earn more from the sale if your company hits certain benchmarks following your exit. Your company depends on you, no matter how hard you have worked to break that dependency. Even with the right plans and strong documentation, your ongoing presence can help ease the transition and train the new owner in the inner workings of your company.
