For most sellers, they tend to put their business for sale, due to need, rather than with the goal of achieving the best possible price. Small business owners often consider selling a business - when they want a change, are moving, or are ready to retire. Forecasting this and preparing the business in advance can make a big difference to your sale price.
Well… duh! This is easier said then done. One of the most crucial elements to establishing a good sale price and to create buyer interest is the businesses most recent performance. Buyers want to buy a business that is growing, not one that is stagnant, struggling or seeing a decline. If your business is well established (+5 years) and has seen constant year-on-year growth – then your in a good position!
The problem is, this is when most business owners want to hold onto their businesses. If it is profitable and making money, what is the point in selling? Small business owners tend to invest a lot of emotion and time into building a business, so selling when sales are high – is usually quiet hard to accept (unless you’re an entrepreneur looking for their next adventure). So it is quiet often seen, once sales start to decline, owners are ready to sell. This obviously will have an affect on the sale price and the time it takes to sell.
Buyers want to know recent sales results. If you can finish the financial year on a high – such as selling off all your old stock, having a clearance sale, fixing up any debts. So your books are finalised at June 30, 2017, this will also create some interest from buyers. They want to know they can come in and continue running the business and make profits grow. Not be dealing with issues from the past year, such as old stock and debts.
Business for sale websites see a massive jump in traffic in January and February… Why? New Years resolutions! As we have all been sitting around with family and friends enjoying the summer backyard BBQ and prawns, we have been dreaming of a new year and the goals ahead. The buyers are out there and they are looking. They have the time (and perhaps the money) to find a business that would suit them and their family. So if you want your business sale to be seen, get it online, and get it in front of buyers for the January 1st rush!
So if you’re thinking of selling your business, the best advice is to be prepared! Have an understanding of what your business is worth, forecast for the future and ensure your business is the best version of itself – when it comes time to sell!