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One of the top questions business brokers get from owners is, “what should I do to prepare my business to sell.” Fortunately, many things you should be working on to sell are things you should be working on anyway. These 10 tips will help you improve your business before selling.

Clean Up Your Financials
While a buyer can see the branding, facility, etc., the financials tell your business story. Those evaluating your business generally require at least three years of financial information. Ensure important business information, including all income records, tax returns, financial statements, cash register receipts, and other records showing income and expenses, are documented appropriately. The more formal your statements will make a better impression and create easier due diligence. Ideally, accountant-reviewed or -prepared vs. internally generated statements. Tax returns are commonly used.

Standard Operating Procedures (SOPs) & Business Guidelines
Having detailed documentation of how you operate your business goes a long way toward attracting potential buyers by allowing for a seamless ownership transition. Update what you have currently. If you don’t have them, now is the time to formalize your business’s operations through manuals and employee handbooks. These materials will help convince buyers that they can easily take over the day-to-day operations of your business.

Address Any Potential Liabilities
Make every effort to take care of present or future problems with the business, including product liability claims, employee lawsuits, tax audits, secretary of state compliance, or insurance disputes. Although the buyer will not necessarily inherit these problems, issues like these will reflect poorly on your business when it goes to market. Also, it is important to have an explanation if one of these issues surfaces.

Clean Up Your Image
What is your business’s first impression? Not just physical but also virtual. Look at what shows up when you google your business. How are your reviews? How does your website look? How does your social media look?

Also, how is the physical location? Is it organized and clean? An orderly shop often indicates an orderly management team and back-room operations.

Update Customer Data & Contact List
This will help place your business above others. Often, your customer list is one of the aspects of your business a buyer weighs heavy value on. If you have sales records and a good idea of your customer base, prospective buyers can use this data to identify growth opportunities.

Contact Your Financial Advisor, Tax Planner, and Accountant
Speaking to your tax advisor for help planning your financial future is wise. Understanding your personal and corporate tax situation may also help you recognize your options concerning deal structure. Also, your accountant can help you address your bookkeeping situation.

Get a Business Valuation
Most business owners have an inaccurate idea of their business value. You should obtain a realistic view of what your business is worth from an objective, outside source. A professional valuation will give you a basis for gauging buyer offers and will give you an idea of what you can expect to net from the sale. It will also tell you your business’s market position, financial situation, strengths, and weaknesses (which you can hopefully correct prior to putting it on the market).

An accurate valuation will be valuable information when planning with a financial advisor and accountant. Also, it will help you with your exit planning timeline. Maybe you need to wait a few years or possibly now is the right time to sell. 6 Overlooked Benefits of a Business Valuation

Management Succession
If you’re vital to your business, who will a buyer be able to turn to for help running the company after you leave? It would be best to have a succession plan before going to market.

That being said. Can you reduce the number of responsibilities and hours you are required to put in for the business? This will improve the marketability of your business, while also improving your current work/life balance.

Your Business Story & Why You Want To Sell
Buyers are always curious about why a seller wants to exit a business. (If it’s so great, why are you leaving?) Be prepared to articulate your reasons. You will want to have an entire business story. Starting with how you got started and your journey. What you did to improve the business. Why is it time to sell, and what opportunities do you see for a new owner.

Also, are you ready to part with a portion of your identity? Many business owners are strongly associated with their businesses. An owner needs to be comfortable parting with that piece of their life.

Keep Your Eye On The Ball
Don’t let your business performance decline because you’re too focused on the sale of your business. This will only give buyers additional negotiating power to lower their offers. A full-service business broker can help insulate you from the noise of the transaction so you can focus on running your business and living your life.

As stated at the beginning, you should be working on many of these things for your business. Even if you are several years out from your exit. You don’t have to go at it alone, contact me for a free consultation. Also, I can lay out what the path of selling your business looks like for you. Information that you can use now to make when you decide to sell much easier and more profitable.

To Learn More:
Reach Ben Shaw directly at 937-623-8571
or by email b.shaw@murphybusiness.com