The final steps in preparing your business for sale are of course critical. This post is part 3 of the series "How To Sell Your Business - Frank Advice From A Broker". First, in part 1, we looked at getting the right mindset and expectations by looking at your business from the perspective of a potential buyer. Then, in part 2, we reviewed how to remove some potential problems. Now we are looking at a checklist of action points necessary to get your house in order, to protect the future of the business and get the best sale deal.

STEP EIGHT: PREPARE YOUR BUSINESS FOR SALE – GET YOUR HOUSE IN ORDER

Here are 20 things you must get right before you go to market, because every single one of these points can have a major impact on the sale:

1. Three years financials, including profit and loss accounts and balance sheets;
2. Exit strategy and/or succession plan;
3. Calculate nett returns and Capital Gains Tax (CGT);
4. Get a business appraisal/valuation – or several;
5. Simplify your management structure and processes;
6. Develop Standard Operating Procedures/ Manuals;
7. Register your copyright and trademarks;
8. Make the most of the presentation of your premises and personnel;
9. Get legal advice on PPSR and Certificate of Clearance;
10. Get tax planning and financial planning advice;
11. Eliminate reliance on “key personnel”;
12. Get your debtors down and under control;
13. Rationalise your stock;
14. Do a valuation of work-in-progress and future orders;
15. Reduce reliance on key clients or suppliers;
16. Secure tenure of premises;
17. Check condition of plant and equipment;
18. Develop future marketing and advertising plans;
19. Check, and if necessary address, the suitability of trading name (is it generic or personal to you, for example?), and
20. Appoint a Broker or Agent.

STEP NINE: TO SPEND OR NOT TO SPEND?

Every business needs ongoing expenditure and re-investment, whether capital or revenue in nature. And while expenditure can reduce short term profits, it may protect longterm sustainability. Although there’s no easy answer, here are some guidelines:

• Act as if you will own the business for another year;
• Saving money on equipment repairs or upgrades may be a false economy, as a smart buyer may ask for a discount to cover these costs or at least get the equipment formally valued;
• With major capital investments, consider leasing; By doing it this way, the buyer can take over the financing costs (remember to disclose this information);
• Don’t DIY – get things done professionally, unless you are an expert;
• And have a reasonable budget for marketing the business for sale;
• While you go through the sale process, run the business in a normal manner;
• If a refit is due – in a shopping centre, for example – plan for the sale prior to the refit (again, with full disclosure).

STEP TEN: PLAN YOUR BUSINESS FUTURE

Good planning gives you control, structures, goals and direction. If you don’t already have these in place, developing them can add substantial value to your business. So, here are the core ones:

1. Business Plan – goals and direction;
2. Marketing Plan – growing your business, tasks for others to implement;
3. Succession Plan – knowing who can step up if the need arises, and
4. Your Exit Strategy – how to leave the business on your terms:

• Value;
• Net Worth;
• Plans and dates;
• Net realisable value, and
• Monitor progress.

STEP ELEVEN: BUSINESS FOR SALE? USE A QUALIFIED BROKER

When you consider all the steps involved in selling a business and maximising the sale price, it’s worth asking whether it’s realistic to do it all yourself; especially when for many of the steps, this may be the first time you’ve attempted them:

1. Conduct a market appraisal;
2. Develop a "Sale of business" plan;
3. Develop an advertising and marketing plan;
4. Identify business attributes and selling points;
5. Identify and eliminate obstacles and problems;
6. Produce a business Information Package;
7. Communicate activity and update the seller;
8. Maintain strict confidentiality;
9. Access database of active, credible local, interstate and overseas buyers;
10. Create demand for the business;
11. Find a suitable buyer;
12. Execute finance, legal and other matters;
13. Negotiate best possible price;
14. Assist with preparing the contract for sale;
15. Assist with the transaction process, and
16. Complete the transaction.

And the cost for all this? Nothing – until the transaction is complete. Your broker is heavily incentivised to get the deal done, and get you top dollar. So you benefit, your broker benefits!To know more and for an obligation-free chat CONTACT ZIGGY AT THE NCP