There are numerous reasons why you may want to sell your business. It might simply be that you want to move onto something new. You may have decided to retire. Or you might think the future of your company is better served by new investment or different management. This is particularly relevant in areas such as franchise resales.
Selling a business, of course, is one thing. Actually getting it right is another thing entirely. If you want to sell your business for a good profit, then first you need to make sure it is worth it.
Is it the Right Time?
There’s often an optimum time to sell a business. It’s worth getting professional advice about the true worth of your company – a third party review of your assets and processes can not only be very revealing it can also give you a pathway to putting in the changes that increase your attractiveness to potential buyers and improve your ability to obtain a higher asking price.
One thing you need to ask is whether it’s the right time for you as a business owner. This is a judgement call but one which is quite important in the whole equation. The other issue to consider is if the industry conditions are good for getting a strong sale.
Get Your Books in Order
No business or individual buyer worth their salt will consider your company if the accounts are not transparent. Most will want to look at least the last three years of books and this needs to be formally laid out for them. The better your books look, the more likely you are to create a favourable impression. A review of your accounting procedures could well highlight areas where you could improve and make your business appear more attractive.
Keeping Your Business Clean
Any potential buyer will want to know that there are few, if any, underlying problems that might have to be handled in the future. Again this comes from having transparency about how you and possible franchisees conduct your business. That includes all written documentation concerning any contractual arrangements. It will also include details of any other relationships such as property leases and supplier information.
Is Your Business Growing?
Potential buyers aren’t going to be interested in a business that is stagnating. If you are too dependent on one particular customer or there isn’t the option to expand that makes an increase in profits realistic, then you may find that interested parties are few and far between. Another problem could be how much the business depends on you as an individual. This can be off putting because you are soon going to be exiting the scene. Putting in the processes that address this prior to going for sale can make a big difference to how attractive your business is and that often means handing over responsibility to your best employees.
In essence, potential buyers will look at:
- Your track record and the potential for future development.
- Your brand and how it fits into the market place.
- The experience of staff currently on board.
- The marketing support you provide to enable your franchisees to succeed.
Giving a shout out about how your business has a good track record and is set for expansion will appeal to potential buyers. When there is a prime opportunity to expand, buyers will not only be able to find new and exciting markets but also access services like bank loans to push their growth model forward.
How your business looks and it’s potential for the future is what largely determines the price that you will eventually be paid. Having the right team in place to make sure that your franchise resale looks as good as it can is important. For most business owners, getting an outside, professional review of the franchise and how much it is truly worth is the first place to start.