Selling a business can be a pretty daunting prospect as there are so many different things to take into account. If you have or are looking for a buyer for your small business, then here are some guidelines and tips for making your sale go as smoothly as possibly.
Can you go it alone?
Many people choose to prepare their small businesses for sale themselves; however, this can be a lot of hard work and extremely time consuming. If you don’t want to do it all yourself you can enlist the help of a Business Broker. These are specialists in buying and selling businesses and they are accustomed to all the legal and government requirements you will need to take into account. However, if you are going to use a Business Broker you should always check their background and make sure they are reputable, as they will be handling your financial information.
Even if you choose to handle the sale yourself, it’s a good idea to consult with your accountant and solicitor to make sure all paperwork is in order and all your legal obligations are being fulfilled.
Prepare your accounts
Having the right documents on hand is essential. Not only will any potential buyer want to see as much information about your business as possible, but this information will also help you value your business correctly. The documents you will need to provide are:
Your business’s financial statements for the last five years, including profit and loss, annual turnover, cash flow and debts.
Assets including information about any buildings or equipment owned by the business, and also non-physical assets such as intellectual properties or goodwill.
Lease documents and insurance policies.
Registration papers such as your Australian Business Number, company name, and any other documents showing your compliance with regulations.
Information about current market conditions and how you compare to your competitors.
Sales reports and forecasts.
Details of your business procedures and marketing plans.
Details of your staff, suppliers and customers.
You will then have to work out the value of your business. This will depend on your industry and the current marketplace and you should research these thoroughly in order to make sure you get the right price.
Finding a buyer
Different states and territories have different requirements about the information you need to provide to potential buyers. It’s important to check the regulations where you live. All information you provide during a sale negotiation must be true and accurate.
You will then need to draw up a sale contract. Again, rules differ between different states and territories. It is usually done by an intermediary, but if you live in NSW, it must be done by a solicitor. It is always advisable to get legal advice when having a contract drawn up, no matter where you live.
Before you leave…
Before you go on your dream holiday with the proceeds of your sale, there are certain provisions you need to make. Firstly, you need to make sure all tax and insurance requirements are taken care of, and that you have provided for any staff redundancies occurring as a result of the sale.
You must also make sure all your business information has been transferred over to the new owners.
There is a lot to think about when preparing to sell your small business but if you plan carefully and thoroughly, and take the right advice from your accountant, solicitor and tax advisor, you can come through it smoothly, ready to embark on your life’s next adventure.