On the runway to getting ready to sell, it’s easy to get caught up in the process before you’ve even established if your business is in the right position for a buyer. While there are all sorts of reasons why you might be selling your business, if you have the opportunity to reflect on whether you’re truly running a sale-ready business, the sale process will be more streamlined overall.
We’ve put together some helpful questions to ask yourself if you’re about to take the next step and engage a business broker or other professionals – take them into consideration to be certain that this is the right step for your business:
Are you mentally prepared for your business to sell?
Business owners recognise that exiting their business is all part of the successful business journey, but have you thought about what this might mean for you personally? If this is a family business and something you’ve built up over a significant period of time, there are likely to be a lot of emotions, connections and a sense of identity tied up in your work.
If you have fellow owners or founders involved, make sure you’re on the same page about when and why you want to sell and what they envision this process to look like.
Being prepared for the sale of your business also means being ready for the next chapter of your life. Are you planning on starting a new business, or will you retire? The overarching question of “what’s next?” shouldn’t be left until you’re about to sign the paperwork. Consider where your focus and energy will go, and make preliminary steps towards setting up for this next phase. (Hint: all-week weekends aren’t all they have cracked up to be if you’re used to the fast-paced life of a business owner!).
Are you selling because you’re burnt out?
Closely linked to our question above, keep an eye out for signs of business burnout and fatigue, which could cloud your business vision and cause you to rush into a sale. Perhaps you need to revisit your staffing and responsibilities to rebalance your work hours, or you need some additional mentoring and expertise in specific areas that are overwhelming you.
It’s not uncommon for business owners to give their all to a business they have created, but being overworked doesn’t always mean you’re ready to sell. It could signal that you need a well-deserved break, and with the right systems and operations in place, you may be happy running your business for another 5+ years.
Do you know what your business is worth?
Across this series (and others focused on planning your business exit), we look at maximising the value of your business and coming to a value that attracts the right buyer while honouring what your business is worth.
Off the top of your head, what does your business value look like on paper? Do you have a rough figure in mind, and can you justify that with financials that can easily be pulled up for a due diligence process?
This is something you’d discuss closely with a business broker in the process of the sale, who will work with you to settle on the right figure, but it’s never a bad idea to get familiar with what you think your business will sell for, and the reality of what the market is saying. Don’t get blindsided by expecting a certain $ value only to be disappointed during the sale process, so planning a feasible and reasonable sale is key.
Importantly, look at where this money will need to go post-sale – are there specific costs in your life or general living expenses that will need to be funded by this payout, and is it more financially suitable to maintain your role as the owner?
Above all, understand that selling your business can be a detail-oriented and time-consuming process; of course, a skilled business broker can take a lot of this weight and pressure off you, but be sure that you have the mental bandwidth and capacity to take on the sale – if you’re too tied up in running the business day-to-day, you might not yet be sale-ready.
Next time, we’ll take a look at how a GAP analysis can help create a sale-ready business.
