In the same way selling a house requires careful planning, putting a business up for sale involves a number of critical considerations. And with the sheer speed that entrepreneurial start ups are being snapped up by larger enterprises, business owners need to plan and act early rather than waiting to plan.
From a robust accounting system to quality sales data, selling a business involves identifying and analysing key assets to ensure you get the most bang for your buck. To help you understand what you need to be aware of, here are three of the top issues that factor into whether your business is ready to sell.
Small business finance can help you provide evidence of your financial health.
Consideration 1 – Up-to-date positive financial records
When a prospective buyer is looking to purchase a business, the first action they take is to investigate the financial health of an organisation. If your business is not able to display these, you risk a low valuation or no sale at all.
In an effort to maximise the price you receive from the sale of your company, it is essential to have your organisation's financial records tell a story that resonates with a buyer. With older, paper-based or even digital, non-cloud accounting systems, you may not be able to paint the picture you would like.
However, with cloud-based accounting software, you can access and compile financial records, wherever and whenever you want.
Consideration 2 – Managing company risk
In some instances, a buyer will look at a business and seek to find areas they can improve. However, this is not always the case. Some potential purchasers may be looking to simply pick up where you left off.
As many buyers avoid bad acquisitions like the plague, it is essential to take risk out of the equation. In many cases this can be as easy as ensuring your important relationships, such as customer contracts and supplier agreements are set in stone for the foreseeable future.
Consideration 3 – Showing growth is on the cards
When Facebook purchased the mobile messaging application WhatsApp in 2014, the social networking company forked out around $22 billion for the startup. While the business only earned around $10 million in revenue in 2013, Facebook were more than willing to pay top dollar.
One of the major reasons for this is the instant messaging company showed huge potential for growth. Therefore, scalability is a major factor for those looking to purchase a company.
However, growth is only as good as the system that manages it. For those thinking about exiting, it is important to have the right software to manage business processes.
If you would like to know more about selling a business, and how software such as Jiwa Financials can ensure it is attractive, talk to me or one of my representatives today.
