Building a business up takes so much more than just capital. It requires you to put in effort, time, and hard work. Before you can even call it successful, you are likely to have gone through tough times, some of which you thought you wouldn’t survive. So, when it is time to sell the business for whatever reason, you want to get the highest possible value.
To achieve this, many variables need to be considered; never be in a rush to sell; instead, take your time and ensure everything is in place and you are happy with the deal. You need to calculate your business value and make any necessary improvements to fetch the best price. Below are some things you should do to sell the business at the highest value possible.
1. Assess the business value
It is the most important step because you do not want to sell yourself short. You also want to avoid overvaluing the business, thus repelling interested buyers. The value depends on things such as where the company is located, the market status, and the industry. The sales, revenue, profits, growth, systems in place and future should all be assessed and evaluated. A professional appraiser is best placed to do the valuation for you. Still, depending on the age and size of the business, you should expect anything between one to four times the annual business net profit. By getting professional help, they might even advise you on other ways to increase the company’s value.
2. Diversify business income
Businesses generally specialize in a specific thing, and it can be risky when you rely only on a single income stream. This kind of risk will greatly affect the business value. Because the future remains unpredictable, the best you can do when targeting high returns with your business sale is to diversify the income avenues. When you have more than one avenue, you will have something to fall back on and bounce back if one dries out. Like they say, always ensure you have a plan B for your business.
3. Diversify business resources
Every business has particular resources it relies on for success. Having only one resource driving the business is risky, not just for you but also for your employees. For instance, having only two productive salespeople is dangerous because you will be left in shambles if they decide to leave the company. It will take a long time before you get back to the level you were initially in. It is crucial to have your business standing on multiple pillars for stability. The more stable your resources are, the higher the price when selling the business.
4. Time the sale well
After you calculate your business value and are comfortable selling, the next thing is to decide when the perfect selling time is. The circumstances guiding the sale can help you decide what time is best to sell. But in general, you want to put the business up for sale when the market is most profitable. If you choose to sell when your profits have a clear dip, it can raise suspicions among potential buyers, and the sale will end poorly. To get the best with your sale, you should place the offer when there is clear growth within the business; it will attract lots of potentials, translating into higher bids. When the perceived value of the company is high, it is time to sell.
5. Optimize business systems
A good business owner will always have a system that runs efficiently. The same should remain when you are considering selling the business. Ensure all software is up to date, the HR procedures are on point, and all loose ends are tied up. You, of course, cannot make any major investments at this point, but ensure that there are no obvious problems that will rob you of some good business value. A well-running system will impress potential buyers; they won’t even mind throwing in a little more to acquire the business.
6. Clean up financial records
No buyer will be interested in buying a business whose records are messed up and screaming losses. The least you can do is tidy up everything that needs cleaning up. For instance, making sure your taxes are sorted and your credit history impressive is a good idea. Pay off any outstanding debts and loans; potential buyers love starting on a clean slate, compared to deciphering odd-looking financial records and clearing debts. Your business value will go higher with organized and clean financial records.
7. Set the business apart from the rest
Buyers tend to be more interested in unique concepts, especially those proven successful. The more unique the business concept you have, the higher the value will be. You cannot ignore that you are likely to face competition even when selling the business. Apart from looking at their possibilities with your business, potential buyers will also compare with other offers in the same industry. Do not allow the chance to sell pass you by simply because the company is too ordinary. Please have at least one thing that makes it stand out from the rest, and the uniqueness will fetch you the value it is worth.
8. Clean up your inventory
It is common for businesses to have dead stock. Sometimes it is inventory you have been holding onto, awaiting a rainy day to sell at higher profits. When you are selling the company, it should also be time to get rid of such fluff. Buyers will not be interested in the extra hassle of moving inventory sitting for a while. It could mean even getting rid of nonpayers you might have. The final offer you give should be irresistible so do whatever you can to make it just that.
You can do these things to sell your business at the highest value possible. You will need to clean up, improve and even make changes to reach the targets you have in mind. Before rushing into selling, check to see that everything is in order and that what you are offering is something every potential buyer will want to acquire. A business in bad shape will always sell low, elevate your status the best you can, and you will be rewarded for it.
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