Four things to do to prepare your small business for sale

Thinking of selling your business? Here are 4 things to consider before starting that process and ensuring you get the best possible price and result overall.

What value does my business offer a buyer?

Your business needs to provide something of value to a buyer. You might have been working for many years and not actually considered exactly what makes your business so great. Talk to your team about this if you’re looking for ideas. What is your unique selling point (USP)? Your USP needs to be short and concise so that any potential buyers can see at a glance what you’re all about.

Consider the opportunities for your buyer. Buyers generally don’t want to buy a business that’s stagnant, they’re looking for growth potential (see the graph below), a recognisable brand, and a strong customer base.

All of these factor into your USP, so consider what intangible benefit that you’re providing to someone looking to buy.

Is your business able to run without you?

Consider this question from your buyer’s perspective. If you were looking at buying a business, what would you want to see? Consider whether you’re indispensable to the business.

People want to buy your business; they don’t want to buy you. It can be very hard for business owners to let go, but responsibilities must be delegated to the management team as much as possible.

Businesses that are solely reliant on their owner are far harder to sell, as the value attaches to the individual, not the business. Think about what would happen if you didn’t turn up for work tomorrow (and for the next month). Could the business survive? If the answer is no, then you might not yet be ready to sell.

Have you cleaned up your accounts?

Before a purchaser signs off the deal, they will want to go through your business records with a fine-tooth comb, so you should ensure that all commercial and financial records are in order.

Can you provide up-to-date financial information and easily demonstrate how your business is performing? Your accounts need to be thoroughly documented, and systems and processes need to be in order well in advance of any sale. Gather key information into easy-to-access files and consider your answers to those inevitable questions. Make sure that there’s no critical information that’s stored only in your head.

Again, put yourself in the shoes of a prospective purchaser and think about what you would want to see.

Have you considered the value of your business?

Have you had a valuation carried out but it is lower than you hoped or expected? Maybe you need to step back and look to add value before selling.

You could focus on improving products or services to increase profits, make yourself more dispensable by delegating responsibility to your management team, or improve internal systems and processes to uncomplicate your business.

Any prospective buyer will want to see how they fit into your business once you’re gone. Their valuation will partially depend on the ease of takeover. Nobody wants to deal with teething issues.

In conclusion, the key to a successful sale lies in thorough preparation, which should begin years before you plan to sell. Avoid waiting until your business is struggling or you feel overwhelmed. Buyers seek potential for growth and profitability so a well-prepared business with clear value and smooth operational processes will be far more attractive to potential buyers.

If you’re keen to learn more, download our full guide, How to sell your business. This guide gives you a full breakdown of what to expect when selling a small business in the UK.