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Preparing Your Business for Sale

There are several very basic things you should do to make your business more attractive for sale. You don’t have to be an expert in buyer psychology to predict some of the things that might enhance your business.

Here are some of the clean-up jobs that you should undertake. Some of them might require a lot of time, so plan ahead and don’t put them off until the day you advertise your business for sale.

Improve or solidify your lease: It’s not smart to try selling shortly before a lease expires. Most buyers are interested in stable and secure lease terms, especially if the location is good. Check your lease for a non-assignment clause, which could mean the lease is not transferable to a new business owner. Some landlords will view a change in ownership as an opportunity to increase rents. You may want to renegotiate your lease before it expires, even if it means accepting a rent increase, just to get terms that will make your business more attractive to buyers.

Review and revise other contracts: Depending on your type of business, you may have supplier contracts, distribution agreements, or other key contracts. Take a close look at these agreements and negotiate to improve them if you can. And make them assignable, if they’re not already.

Dispose of outdated, obsolete, or damaged inventory: Assets that a buyer wouldn’t want are not really assets. They detract from the overall appeal of your business and may be cluttering storage space, so get rid of them.

Repair or replace outdated or broken equipment: Your business should project a modern and efficient image. Clunky old machinery and yellowing computers don’t foster that type of image.

Clean up the books: Shoebox accounting really doesn’t cut it when it comes to presenting financial statements to prospective buyers. If your bookkeeping is in need of a major overhaul, you may want to run things for a full year with the new system before trying to sell.

Cut unnecessary expenses: This will help make your business leaner and increase profit margins. Those are major pluses when you try to sell.

Let bad employees go: This requires diplomacy and legal positioning, of course. Not all buyers will want to continue with the same staff, but many will. The transition to a new owner is difficult enough with good employees. Potential buyers will not only ask about employees, they’ll confidentially visit your business and evaluate whether or not they can work with the various people involved.

Make your branding consistent: This means making sure all promotional materials carry the same version of your logo, the look and feel of your website matches your overall image, and every part of your business reflects your core values.

Clean the place up: In many ways, showing a business for sale is the same as showing a house for sale. Give it a new coat of paint and do those little repair jobs that you never got around to. Clean everything inside and out, replace that one dirty ceiling tile in the bathroom, wash the windows, and organize the workspaces.

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About the Author

Bill Selwood, Kirby Business Group
1401 Wellesley Terrace
West Chester, PA 19382

If you would like to re-print this article, please contact the author.
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