Even if you have no immediate plan to exit, it is advisable to prepare your business for sale, says Michelle Hawkins.
Regardless of whether you plan to sell your business, pass it on to the next generation or continue to develop and grow, it is good practice to prepare your business for sale. By making the business as lean as possible you will maximise its returns.
The first step in preparing your business for sale is to de-risk the business by putting the correct systems and processes in place. This will give comfort to the market that the business can continue to thrive without you.
Practical Steps To Prepare Your Business For Sale
- Invest in a strong management team
- Ensure all employment contracts up to date and documented
- Clearly define key roles and responsibilities of staff
- Ensure that contracts are in place with customers where possible
- Ensure that leases for premises are in order
- Help your business stand out by highlighting your quality accreditations, awards, etc
- Prepare good management information (Real time cloud accounting can help with this)
- Prioritise good internal communication to bring your team along
- Optimise financial performance ensuring that your accounting policies are appropriate
- Ensure up to date accounts are available
- Identify any surplus assets in the company
- Check any contingent liabilities or claims that need to be addressed
- Ensure that the intellectual property assets are properly registered and protected
Businesses should be focusing on these practical actions all the time. However, they are especially important when you are considering a sale within the next 5-10 years. It takes time to prepare your business for sale so you cannot leave it until the last minute.