Throughout my years of successfully assisting business owners in selling their businesses, I have been asked the same questions by many potential sellers.
1. How much is my business worth?
The most common question we get asked from our clients is for us to assess the value of their business.
Business Valuation can be confusing as there are a large variety of techniques and approaches used to value a business. Largely, the process and end result can come down to a matter of expertise and experience on the part of the valuer, and can ultimately depend upon which valuation methodology the valuer uses.
The most commonly used approaches are
1) The Market Data Approach
2) The Asset approach
3) Future Maintainable Earnings approach
I have explained this in more depth in a previous blog; https://www.morganbusinesssales.com/post/what-is-my-business-worth
2. How long is the selling process?
This is a tricky questions to answer as the buying market is constantly changing. But I also explain that the quickest I ever sold a business was one week, and the longest it ever took me to sell a business was 12 months. Additionally, I explain that price and terms sell a business. The lower the price the more affordable the business will be. The lower the deposit, the more people will be able to consider it. If owner financing is an option, this will also assist.
3. What can I do to make my business more desirable?
Having thorough and up to date financial statements that are organised and easy to read is the best place to start. Having a reputation of quality products and great customer service is also a valuable part of a business being sold. Make sure your online Google business reviews and Facebook reviews are looking as good as possible. Systems and processes are also critical. You may need to install a modern CRM or customer management system to ensure all of your business data and transactions are logged clearly.
4. Is there anything I should not do during the listing period?
Don’t stop working at making your business successful! You need to stay focused and operate your business as best you can until the sale date. You need to work as hard or harder no matter how much you are looking forward to the business being sold. Making major changes during this period should also be avoided. Keep all employees as happy as possible and make sure your equipment and machinery are well maintained and properly functioning.
5. What is due diligence?
It is the process where the Buyer examines all of your financials, makes sure there will be no issue obtaining a new lease or taking over the current lease, approval (if applicable) by the Franchiser, Licenser, Distributor, bank, etc. Licenses need to be current whether or not the buyer will have to apply for their own. You want to fully disclose everything and not leave any skeletons in the closet.
6. What else do you suggest I do to impress a Buyer?
Have a job description for each employee. Their pay rate, time of employment and hours they do ready to help the buyer understand what each person in the business does. Make sure you fix anything that is broken. You do not want the Buyer to wonder what else might be a potential problem.
Offer a transition period to help the buyer understand how the business is run. The longer the transition period, the more comfortable the buyer will be taking the reins.
Make suggestions on how the business could grow under new ownership that you have not yet tried.
7. What happens if I agree to do some owner financing and the Buyer misses a payment?
The Solicitor overseeing your contracts at the time of sale will have special conditions in the sale contract. This will outline the amount that is being financed to the buyer, the repayment amount and the frequency of these payments. There will also be a clause stating what will happen if the buyer defaults on these payments. This contract will then be looked over by the buyer’s solicitor and signed by your solicitor, you, the buyer and the buyer’s solicitor. This gives you the safety to recover any money owed by the buyer as per the contract agreed to by all parties.
Related Tag: Sell Business Gold Coast