In today’s day and age when the dynamic business industry goes through its fair share of ups and downs, maintaining a profitable business is no easy task. Businessmen world over seek to sell their businesses for professional as well as personal reasons and encounter a series of unique problems depending on their case.
It’s natural for any business owner to close a deal as soon as possible, despite all the hindrances. For a buyer, however this creates anxiety since due diligence and investigation are an integral part of any transaction pertaining to selling or buying. For any party involved in a typical purchase or selling transaction, it is important to remember some key points.
Any business can be classified into three primary states: growing business, stable business, failing business. It’s comparatively easier to understand the first two stages and therefore far easier to sell a business which is doing well or is stable. However for the third stage where the business owner understands that his business is failing, it’s difficult to find a suitable buyer. The strategy, therefore, for selling businesses in the above broad stages needs to drastically differ.
The following points can certainly help in bringing clarity before and during the sale of a business.
Highlight your strengths
All business have strengths and weaknesses. For a potential buyer, it is important to understand whether the strength of your business lies in the financials, the concept or the customers. It greatly helps to de-clutter and organize your processes before approaching a potential buyer; this also helps later on during the finalization of a business deal.
Streamline your processes
The period leading upto a potential deal and during the deal is make or break for a business that needs to be sold. It’s crucial to run processes efficiently, to streamline all processes including but not limited to financial and operational. It makes a huge difference for a potential buyer if they witness a business running efficiently even though it is at the point of sale. Ensure all your financial liabilities have been fulfilled, all your customers are aware of the impending change and your employees are in the loop about the deal.
To maintain transparency, it is crucial to be honest about all your figures and data. A business transaction of this nature is delicate and it demands that both parties are honest with each other. It is also ideal if you get an independent firm to audit your business and prepare a valuation report for your business. This valuation report will serve as a pitch as well as a proof when you are in talks with potential buyers. It is also an intelligent strategy to avoid quoting an amount that is far greater than the value of your business – this gives you an edge during the negotiation process.
Keep your expert ready
A team of chartered accountants and legal advisors are highly recommended before you commence with any transaction. Their advice is objective and in the interest of your business. It also give the business owner/owners perspective since he is removed from the primary operational process. Along with this, it also assures future owners of the credibility of the business.
Lastly it is crucial that you engage with multiple potential buyers before zeroing in on a deal. Like all transactions, business transactions too are delicate and can fall at the last minute. For this reason, it is important to continue engaging with interested parties till the final contracts are signed and the deal is officially closed.
If you are looking to sell your business, you can register on BSP Freedo, create a business deal and our operational team will help you connect with potential buyers best suited for your needs.