Are you ready to sell?

Russell Veitch of KWS www.keywealthsolutions.co.uk, looks at the process of preparing your business for sale and whether it is the right time to do so.

Why do you want to sell? What plans do you have for the future? Are you ready to let go? These are all questions that you should be asking yourself long before you start attracting the interest of potential buyers.

There can be a number of reasons why you would want to sell. Maybe you want to spend more time with your family, have more time to yourself and travel the world, or you might simply want to put money in the bank. Considering selling part, or all of the business may help you to achieve these goals, but parting company with a venture that you have no doubt sweated blood and tears to establish is a big step and a decision which must not be taken lightly.

Before selling your business, you need to carefully assess your reasons for doing so. You only get one chance to sell a business and for this reason, it is vital that you weigh up the different selling options to decide what would work best for you. Carefully planning the process will ensure that you get the best possible result from the sale.

If you are considering selling your business its important to ask yourself four key questions:

· What are my objectives as the owner of the business? - You might want to realise some or all of your investment in the business to fund your retirement or future projects.

· What are my objectives as manager of the business? - Do you want to retire as soon as possible or prefer to keep running the business?

· What are my objectives for the business itself? - For example, the business might need new investment in order to grow.

· Who else will be affected and what will they want? - For example, other shareholders, managers and employees, or even key customers and suppliers.

When should I sell?

Whether you want to generate the most possible value from your venture, or find a buyer who is a ‘safe pair of hands’, you need to start planning years, rather than months in advance. Typically, including preparation, you should give yourself three to five years to sell a business, with only the last nine to 12 months being concerned with the actual marketing and negotiation process.

No matter who you decide to sell to, selling at the right time can have a significant impact on the price you get for your business. If possible, plan ahead so that you can pick the best moment rather than being rushed into a quick sale. For example, if you plan to retire in five year's time, it's a good idea to start planning the sale of your business now. This will give you an opportunity to build value in your company and put into place the systems and structures that will not only attract potential buyers, but also make the transition between owners as smooth as possible.

Are you emotionally prepared?

Deciding when to sell will have as much to do with your mentality as your accounts and assets. All too often people rush into the process and do not give themselves enough time to prepare for the emotions that will arise during the sales process. You will need to make a lot of business decisions such as deciding who you want to sell the business to, when you want to sell it and what role you are going to have, if any, in the company after the sale. You will also have to prepare for the sale of your company on a personal level. Sellers often have mixed emotions when it comes to selling their business, battling between the desire to capitalise on their hard work versus the difficulty in letting go.

We have worked with a lot of businesses and all too often the seller will have a change of heart and pull out at the last minute. This change of heart could prove to be costly so before setting out on the sales process you need to know for sure that you are ready to part company with your business. It is important that you only put your company up for sale when you are truly ready to sell it, as any buyer will have to expend a considerable amount of time and money in pursuit of your company and will not be pleased if you back out at the last minute. It can be difficult to divorce yourself from the company, your staff, customers and suppliers. Although many owners will want to sell to a ‘good pair of hands’ you need to draw a line under this and move on as once your business is sold it is no longer your concern.

Is the business ripe for sale?

Even if you are personally prepared, it is important that you carefully consider if your business is ready. Planning for your business to be sold at any point allows you to streamline your business operations and groom systems and procedures to ensure it is as attractive as possible to would be buyers. No one wants to buy a company on a downward spiral and as ironic as it sounds, you should ensure that you leave something for the buyer and aim to sell your business when profits are increasing and the company’s balance sheet reflects a positive growth for the future.

Considering if you’re ready to sell business is a step which cannot be achieved overnight. It is a long and emotional operation, however by planning ahead and gaining specialist advice prior to the sale, this process can run a lot more smoothly.

KWS specialises in growing and selling businesses. If you are looking to buy or sell a business visit www.keywealthsolutions.com or call 01273 704777 for more information.