Maximising the sale value of a small business requires good planning. Doing the preparation well will also give you the confidence to negotiate the price well.
There is rarely a lack of interest in new businesses coming on the market. Businesses such as independent shops, personal services and the restaurant trade are typically bought by people who want to be in control their own work-life balance, even if that means they are likely to have to work much harder in the early years. They usually have a vision, and are not put off by the idea they are likely to have a lot of hard work ahead of them.
An owner-operator is usually be looking at the purchase as a lifestyle choice, not just a dry financial proposition.
You’ll want the new owner to do well, and that means showing them how you have managed things.
We cover the financial details they will want to see elsewhere. But besides clearly presenting the facts and figures, you have a wealth of information that will be valuable, often essential, that will never appear in financial reports.
The peculiarities of your day-to-day operation are best passed on to a new owner by writing them all down, rather than relying on a verbal hand-over. A well-organised file will make the transition of owners much easier. Areas to cover would include:
- Your usual schedule
- Phone numbers and contact details of all suppliers, and customers
- Notes about key suppliers and customers
- What promotion you usually do, and details of anything that has worked well
- Files and Manuals for equipment that is part of the business
- All they will need to know about staff and sub-contractors
- The small details and peculiarities it may have taken you years to learn
The small details that you have learned over the years are an invaluable resource for your buyer. And the more you can do to give a buyer reassurance they can make a success of the business, the better.
Sometimes as business transfer agents we see sellers who suddenly seem reluctant to sell, and very often it’s really about their wanting to make sure their creation will be properly looked after by a new owner. Writing it all up ahead of time is an excellent way to make this happen, and for you to let go with a clear conscience.