SELLING YOUR BUSINESS: THE BITS YOU MUST KNOW AND WHAT TO LET GO

One of the biggest obstacles between a business owner and a business sale is the need to ‘control’ everything, from top management all the way through the company.

Last month, we looked at how you can inadvertently affect your sale[1] for the worse.  If you secretly believe that you need to be the head of every department, MD, CEO and Chairman to boot, the truth is that your business probably is not performing as well as it could.

Moreover, you’re going to run into trouble when it comes to selling, if that’s what you’re considering.  You need a good team around you – not just on a daily working basis, but on a business sales basis, too.

Not all forms of control are bad, though.

In fact, when it comes to your reaching a realistic idea of what kind of shape your business is in before you go to market, you need to take full control of your facts and figures.  This is not the same thing as taking control of every role in your business … and it will go a long way to helping you to find your ideal buyer.

CHECK THE PULSE OF YOUR BUSINESS

Loosely speaking, there are five things to consider when you’re preparing to take your business to market.  Any business sales team worth its salt will advise you on each of these and add more to your bespoke list of considerations as it gets to know you and your business better.

1)    UPSKILL, RECRUIT AND DELEGATE TO YOUR TEAM

As we’ve already discussed, find others better qualified than you to handle the areas of your business that you either don’t enjoy or don’t do as well as they deserve.  Funnily enough, they’re often the same areas.  Remember, if a buyer perceives that your business cannot operate without you (even if it only looks that way because you feel the need to be involved) then they can’t buy the business without you.  If they do, they’ll adjust the price significantly to counter for it!

2)    MAKE A WILL

We’ve worked with owners who have ended up in charge of a business that they didn’t want to run because they’ve lost a partner to illness or death.  This can be a very stressful, upsetting situation to fall into, especially in the midst of grief.

Making or updating a will might seem obvious.  You’d be amazed, though, how many business owners create five-year and even ten-year plans without one.

3)    DRAW UP A PROPER SHAREHOLDERS’ AGREEMENT

Before you disappear into your dream future, you and your shareholders need to know where you all stand.  Your agreement needs the professional eye of a good solicitor – not so much because of the clauses that are in it but to flag up the those that should be.

As they say, “You don’t know what you don’t know.”  Invest in a good legal team and avoid pitfalls during or after the sales process.

4)    APPOINT A SUCCESSOR

It’s arguably easier for a family business to name a successor – although it doesn’t always follow that the next generational relative is necessarily the best person for the leadership role.  Make sure that whoever you appoint as the leader of your business is the best person qualified for the job.

5)    GET ON TOP OF YOUR FINANCIAL REPORTING

This is one of the most likely stumbling blocks that a business owner preparing for sale will encounter:  a lack of monthly management accounts and a decent accountant who’s keeping an eye on them.

This is how you can track your profit and loss, balance and cashflow forecasting.  Whatever you think your business is worth, there is really no way that you’ll be able to have a realistic idea unless you have monthly management accounts.

Here’s why they’re so important:

  • With up to date, accurate information, you can make a stronger forecast on how your business is likely to perform in the coming months.  This is key to any prospective buyer.
  • You have greater control when you can identify trends and changes, especially when the latter apply to costs.  You will be able to see how to budget whilst retaining or even improving results.
  • There’s a lot to be said for ‘instinct’ in business, but with monthly management accounts you don’t need to rely on it when planning growth, expansion or diversification.
  • When you are in control of what’s happening in your own financials, you can plan your tax liabilities better with the help of a good accountant.  It’s not your job to know all of your top taxation payment deferment opportunities and such.  Employ an expert who is paid to know, and see how much more streamlined and profitable your business becomes.
  •  Making these accounting decisions regularly and early can save you more than a huge headache at the end of your financial year.  Your year-end accounting costs are bound to lessen when your system has monthly management accounts as a solid foundation.

When you eventually speak to your chosen business sales team, all involved will be delighted to see your monthly management accounts.  It spares the sales process a lot of time, as we’d have to get to the bottom of what’s truly happening in your financials in any case.

With those crucial parts of your background already filled in, together we’ll be able to move ahead with your plans far more swiftly and get you a great price for your business.

Whether you want to move ahead right away and sell or to hold back and prepare, EvolutionCBS can help.  Find out how you can continue to prepare your business for sale without having to make any premature decisions by talking to one of the team at EvolutionCBS.

You’re welcome to come along to one of our free EvolutionCBS webinars. In the meantime, you can make a start towards your goal right now and download your complimentary Business Valuation Report at https://evolutioncbs.bizequity.com.

Here’s to your moving forward with your sale.

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© 2020 Evolution Complete Business Sales Ltd.

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