7 Key Steps To Selling Your Small Business

Nothing compares to the struggles of starting a business from the ground up and the satisfaction of watching it grow and develop into a flourishing...

  • 7 Key Steps To Selling Your Small Business
    Lucas Nguyen Image Lucas Nguyen

    7 Key Steps To Selling Your Small Business

    Nothing compares to the struggles of starting a business from the ground up and the satisfaction of watching it grow and develop into a flourishing enterprise. Often entrepreneurs spend a lifetime building a company and nurturing it with their heart and soul. So when the time comes to say goodbye, it is an emotional moment which is marked by several challenges. You need the assistance of a professional lawyer, broker and accountant to keep track of all the documentation and legal consequences involved in the deal.

    In case you have decided to sell your small business in Australia, you will not find a better time to do so. The economy is stable, trading and investments are moving in a positive direction, and young and aspiring entrepreneurs are rushing to acquire established businesses for sale in Australia. Sellers are getting the price they desire and making their retirement a happy affair. However, before you jump the bandwagon, you need to prepare for the negotiations and the final handover.

    So let us help you in making the process easier by listing down seven key steps to selling your small business.

    Organise The Business Records

    You need to start planning for the big day, and it must begin with cleaning of all the records and putting everything in order. The accounts must be updated, and an extensive business history should be prepared along with the tax returns and sales records, including all the past numbers, current figures and projections. The potential buyer will request for all this information to understand the viability of the entity. Thus you must be ready with it.

    You also need to make arrangements for succession planning even though you do not know the new owner. It will get the buyers interested and invoke the confidence to purchase a well set-up business that has a succession strategy in place. Basically, you should have everything that convinces the buyer that he is entering into a worthwhile venture.

    Calculate The Worth Of Your Business

    Calculating the worth of your business is the most crucial step in the selling process, and you must keep your personal bias out of this scenario. Thus it is recommended to take the assistance of an expert in this regard to get the correct value of your organisation ascertained. It should be determined after considering the price trends in the industry, projected returns on investment of your business, and future performance of the company.

    The business appraiser will help you in evaluating the goodwill of the organisation and putting a price tag on other intangible assets which cannot be quantified. The cost must include every possession such as digital presence, trademarks, intellectual property, customer database, supplier database and much more. You must shy away from setting a sky-high price which deters the buyers as well as bringing it down to a bare minimum, which leads to losses.

    Prepare Your Exit Strategy

    Similar to succession planning, you need to start working on your exit strategy. As the owner of the business, you must be managing several functions and roles such as the planner, leader, brand ambassador, board member, decision maker, etc. You need to start making alterations in your profile to consciously move away from the jobs dependent on your directions. Create a space that can be filled by the new owner quickly without leaving a void.

    Do not talk about the sale with your employees as they can panic and start leaving or become anxious about their future under the new owner. Break the news gradually after the handover and stay onboard for some time to let things fall into place and allow your team to become familiar with the changes.

    Work Hard To Amplify The Sales

    A budding entrepreneur will show interest in the business when he will see that the enterprise is performing well. Thus you must divert all your energies towards achieving higher sales targets to show an upward trend in your sales portfolio. It will help in driving home the point that it is a cash-flow positive business which is in good shape and has immense potential for expansion.

    It will also help you to get a higher price for your business and prepare it for sale. So pull up your socks and boost your sales with an aggressive marketing program, reselling to existing customers and introducing new offers and referral programs.

    Putting Up Your Business For Sale

    While some people rely on hiring brokers, many others have switched to the digital platform for advertising their business for sale. The best part about this is that it comes at a much lower price with high visibility as compared to a newspaper advertisement. These websites are viewed by thousands of buyers, and they create enticing adverts for your organisation which bring several qualified leads.

    You can then start screening the potential buyers to find the right candidates with the required background and zeal to take your business forward. While they carry out due diligence to assimilate the growth potential of your organisation, you must conduct a check on their financial capabilities and their competence to pay the asking price upfront. Sign the non-disclosure agreement to prevent leaking of any sensitive information.

    Start The Negotiations And Paper Work

    Things usually go out of hand when you start becoming complacent and think that you have everything under control. You may have landed the best buyer, but if you are not good at negotiating, you may lose out on a big opportunity of making a profit or end up underselling your organisation. So prepare your case in advance and seek help from experts to get the price you want. Your lawyer must have already assisted you in drafting the NDA, and now you will need him to create the sales contract.

    Also, you must transfer the assets in your own name which will not be a part of the sale, such as a car or a residence. The contract should cover everything ranging from the list of the assets and intellectual property to employee agreements and domain name usage guidelines.

    Get Paid And Plan For Your Future

    It is advisable to get the money upfront so that you can utilise it according to your exit plan and pay all the people who assisted in the transaction. If you do not take the whole amount at once, there are possibilities that you might not get paid the instalments on time or will have to follow up with the buyer several times before getting the money.

    To avoid any disputes later, it is better to get the entire sum as early as possible. Once you have received the cash in your account, do not go on a spending spree. Take time to invest in opportunities that will provide decent returns and secure your financial future after retirement.

    Endnote

    It is not easy parting ways with something you have built with a lot of hard work and determination. It can be an overwhelming situation. However, make use of the tips mentioned above to get the right price for your business for sale in Australia and prepare to seal the deal without any hassles.

  • Author Info Lucas Nguyen

    Lucas Nguyen is an immigration expert with loads of experience of working in public sector and as an in-house lawyer. Lucas graduated with a Bachelor of Law and Master of Law in Global Business Law from La Trobe University. His sole aim is to provide best legal services, to his clients, on complex Australian Immigration Laws and commercial transactions. His association with Business2Sell is not new, and we welcome him as our guest author.