The decision to sell a business can be life changing. In many cases, company owners will have dedicated countless hours and invested large amounts of money in the hope of creating a successful business. Therefore, letting go and moving on can be difficult but it can also offer many benefits. The important thing is to ensure it’s the right decision for you and your company, as everyone is different.
Why Sell?
Selling a business may conjure up ideas of low profits and bankruptcy but there are many reasons why owners may make this decision. Whether it’s a change in the business itself, a change in the owner’s life or a mix of the two. For example, an owner may have taken the company as far as they can and continued growth could depend on someone with a different skillset or experience. It may also be that an owner has lost interest or drive in their company and would like to move on to something new. Of course, it’s worth noting that many businesses are sold for the simple reason that the owner wants to retire.
There are almost as many reasons for selling a business, as there are businesses. Whilst there are advantages to selling, there are some risks involved and these should be considered before moving forward with a sale. One of the main risks is financial as owners would be giving up a major revenue stream, with the potential for higher profits in the future. Of course, the sale itself will provide an income but it will be a single lump sum, as opposed to a continual stream. This can be particularly risky if the owner is using this money to invest in a new project or business. Success isn’t always guaranteed.
Those who have decided that selling up is the best way forward will then need to think about the process itself. What is the best way to approach selling and what should be avoided?
Timing
Timing is crucial when selling a business. It’s easy to assume that an owner would want to sell when their profits are down and the company is struggling but this isn’t going to be a an attractive prospect to potential buyers. Businesses that are thriving, bringing in a profit and not posing too much risk are that ones most likely to sell. Therefore, potential sellers should try to get their house in order before they put the company on the market. This means everything from cleaning up admin, improving financials and ensuring that your business is as healthy as it can be.
Workload
The aim is to make your company as attractive as possible to buyers and one way to do this is by revaluating your own position. The potential buyer is going to step into your shoes and therefore take on your workload. So, for example if your company is dependent on you working long-hours, with heavy over-sight, this could potentially alienate buyers who are looking for a more passive role. Owners who are looking to improve their prospects should take a look at how their business model can be changed. If you’re a hands-on boss who needs to work long hours, look in to delegating tasks and responsibilities to staff. The more that you remove yourself from the business, the easier it will be for a new owner to step in.
Diversify
When choosing to buy a business, one of the main factors that will affect a decision is risk. Prospective buyers will be investing large amounts of money, time and effort and they will be looking for the safest return on their investment. One way in which a business can reduce their risk is by diversifying. Whether it’s income streams or customer acquisition, the more that you have, the more that you have to lose and therefore the more stable the business is. Diversification isn’t always easy but it can make a huge difference in the likelihood of selling your business. In terms of income streams, business owners could expand their products and services. For example, offer more options and provide them to more areas across the country. When it comes to customer acquisition, there are many ways in which to attract new consumers. For example, utilising multiple types of social media, advertising and promoting word of mouth marketing.
Selling your business can be a daunting prospect and its worth getting sound professional advice. Salhan accountants have many years of experience and are specialists in this area. To help make a decision that is right for you, click here for more information Business Disposals – Accountants Birmingham and Droitwich (salhanaccountants.co.uk)
