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As a savvy business seller you will want to do everything in your control to prepare your business for sale. It’s the smart thing to do.

1. Give yourself time
2. Have  CPA prepared financial statements
3. Make yourself redundant
4. Demonstrate future potential with current growth
5. Become independent of any one customer/ supplier / employee
6. Have a strong cash flow
7. Build a client base who give recurring Revenue
8. Have a strong brand and marketing System
9. High customer satisfaction levels

1. Time

The more time you have to prepare the better. Ideally 3 to 5 years, Yes YEARS! To get the highest offers possible requires laying significant groundwork; as you will see in (2)-(9).

2. Financial Statements

These somewhat boring annual scorecards are the backbone to presenting your business to a buyer and their due diligence team. The more credible the information the better.  CPA prepared is the starting point. This is often referred to as a ‘compilation’.  A ‘Review’ is the next level up. These offer limited assurance that the numbers are accurate. ‘Audit’ is the top level and is a requirement for all publicly listed companies.

3. Make Yourself Redundant

A new owner does not want a business that revolves around you, and you don’t want to be there either. Work to remove yourself from as many of the operational decisions as possible. Systems, procedures and checklists should be in writing and your team should be well trained so bring on a team member who can be the day to day manager or Chief Operations Officer, if you want to get fancy. Keep to high level financial review and strategic planning and of course emergencies.

4. Growth and Future Potential

A motivated buyer is looking to the future. What do you have to demonstrate that potential? 

• Historical forecasts versus actual results to show your growth trends are realistic;
• Sales funnels that are busy;
• Long term contracts;
• Customer wait lists (think about Tesla).

5. Independence

Being tied to a single large customer, supplier or key employee is a red flag to a buyer.  What happens if they stop doing business with you? Spreading your risk and rewards across a broader portfolio makes your business more attractive.

6. Strong Cash Flow

Any business generating plenty of surplus cash is attractive.  Your buyer will be funding the purchase either with their own cash or by borrowing (from you or a 3rd party lender). Either way they need to see a strong return on investment (ROI) so they can pay you the big bucks. Collect your debts on time, pay your suppliers and carry the right level of inventory and don’t borrow unnecessarily.

7. Repeat Customers

Do your best to build a client base with repeat customers.  Long term contracts are best, but even showing customer lifetime revenues are increasing, customer loyalty on the rise and customer retention strong, really help make your business more attractive.  Have the statistics available.

8. Strong Branding

Your business has to stand out from the crowd. You are probably not unique, so make sure your marketing stands out and you can show a strong ROI on marketing spend. Keep details of the copy, images, ad layout, where you advertise and the annual campaigns you run.  These can form another asset you can leverage in a sales negotiation.

9. Satisfied Customers

Testimonials, Google MyBusiness reviews and stars, Facebook reviews, Yelp, LinkedIn, Glassdoor and BBB.  These are all easily accessible to the public and form a fantastic way to create a good first impression…or not. Manage your online reputation diligently, keep track of your net promoter score (NPS).  A strong and rising NPS shows you have a business that treats its customers well and they will recommend you to others. Praise worth investing in.

This is why you need time AND a plan to get your business in the best shape possible for sale and attract the best offers when you do finally sell. For most business owners this is the single biggest transaction you will undertake.  You wouldn’t go into a sales meeting unprepared so be intentional in planning the sale of your business.