Its a sad fact that only 8% of small businesses are sold for a decent price. This is not good news if you are relying on selling your business for your pension, or indeed for any other purpose.
However, many more businesses would be saleable for fair value if the owners had planned their exit in good time.
Will you transfer your business within your family, or do you want to sell it – to an employee, or to an outside purchaser?
How much do you want for it? When? Will you stay with it or move on?
You’ll need to think this through because your exit strategy will determine how you go about positioning your business for its eventual sale.
Positioning your business for sale
You’ll start with a valuation and you’ll almost certainly find it is well below what you need.
So, then you’ll need an analysis of your business to show you what has to be done to achieve your price. This may include:
- getting your accounts in shape and audited;
- some growth, not the least to show your business has potential; and
- positioning you, the owner, so that on the eventual sale the business can be run either without you or on a planned exit path such as an earn-out.
Probably 2 to 3 years – when you have done the analysis, you’ll see this is the length of time it is going to take to put your business in the right shape to sell it for a good price.
Plan and make the changes
Now that you know what has to be done and who you might sell it to, you can get on with planning the changes you need to make to your business and making them happen.
You’ll also need to identify who, in the long run, might buy your business so that you can position it to be attractive to them.
Get the right help
Having gone to all that trouble the last thing you’ll want to do is to sell cheap. So, do make sure you choose people to help you who have a track record in achieving excellent value.
If you are in this situation and would like to talk to someone about it, please feel free to contact us. We can help in every stage from the setting your exit strategy through to finding a buyer and making the sale.
Posted by Peter Johnson, Business Advisor with SGBA. If you would like a free initial consultation to discuss your business, including your Exit Strategy and Plan requirements, call Peter on 07714 093406 or email him at firstname.lastname@example.org.