Preparation for Selling a Business

In any sale you can only make the sale if someone is willing to pay for it. In other words you have to look at the market and determine if a sale is realistic. The 2009 economic conditions are said to be improving and that 2010 will be a better year, but that does not mean the economy will be in full recovery mode. It may mean that assets are still tied up and banks are still unwilling to loan money to a buyer of a business.

So you certainly have to look at what the local and world economy is doing to determine if your business can be sold. You also have to ask a few difficult questions when it comes to your business. These questions are as follows:

1. Is your business healthy? If your business is in trouble and not making enough profit, it may close if you do not sell, etc. You may have trouble selling it for the price you need out of it. A financially distressed business is often a target for a buyer with the collateral, but not always in a good way for you.
2. Do you have the basics to make the business look like a great sale? This would be organisation, management, and employees. If you have a great system it will be highly attractive to the buyer.
3. Is your financial record strong? Buyers want to see increasing profits over time with a growth potential in the wings. A business that has no room to grow is often not a target of a buyout. However, strong financials can turn the tide.
4. Trade purchasers are something you may want to look for. They often have the motivation to buy another business, but it will come down to if the business is too expensive for them at the moment. Sometimes trade purchasers prefer to concentrate solely on their existing businesses.
5. Does the existing management team want to buy the business? You may find someone working for you is willing to purchase the business. They feel it is time to move up and they enjoy working at your business. The downside is that they may only be able to offer a modest amount.

By planning and preparing for the business sale you have the potential for finding the right buyer at the right time. You want the business to be attractive to the buyer, but more you need it to be the right time for a business sale to go through. A struggling economy can hinder you in your fight for a good price on the business. Take your answers to the above questions and then decide.