Over the past month, I’ve been talking about selling your business. We started with the most significant component, how we define success. From there we’ve moved through everything from the fundamentals of pricing a business, to the factors that indicate ability to achieve a preminum price, to the elements that could lead to an inability to sell your business. Today, I’m going to address preparing your business for sale. Specific actions you can take to improve your business’ marketability and its ability to earn its highest market value.
Here’s the single most important piece of advice I can give you: Start Your Planning Well in Advance
Most sellers I work with make one simple but significant error. They wait much too long to begin the process of readying themselves to sell. For many business owners it seems as if many factors, which previously have been below the conscious level, suddenly emerge and lead the owner to decide it is time to sell. Then it is not unusual for the owner to come to me, request help in selling their business with the expectation we can conduct a successful sale in a matter of months!
Sellers need to start much earlier in their planning if they are to achieve the best results. Buyers typically look three to five years back at a business’ financial history and records. The factors that influence discounting can take years to rectify. Therefore, the seller who wants to maximize price and marketability will start years in advance taking appropriate action.
Next up on preparing your business for sale: Financial performance and reporting