With the right plan and strategy, you can help your customers prepare their business for a successful sale. Understanding your goals and current business status can ...
At some point, entrepreneurs have to make the difficult decision to step down from their position or sell the business. For many, selling their business allows them to reach their retirement goals or the next chapters of their lives. You can do a number of things to help your customers prepare their businesses to sell and meet their life goals in the process.
How to help customers prepare their business for sale
Preparing a business for sale is a multi-step process that should start with your customer's goals.
What are your ultimate goals? The first step is to determine your client's ultimate goals.
When do they want to sell? Are they looking to sell in the next 3-5 years or beyond?
What's your next chapter?
After selling your business, what are your plans for the next stage of your life and retirement?
How much money will they need?
Are you planning to pass the money on to your children or donate it to charity?
Understanding your ultimate goals is an important step because it will help you better prepare your business for sale. If your client wants to sell his business and travel the world for a few years while paying his grandchildren's college tuition, he'll need to place his business where selling can afford him this luxury.
Where are you now?
Once you understand your client's goals, you can begin to see where they are right now. To achieve your ultimate goals, your business must be in the right place.
Consider:
The present value of the firm.
They already have enough
If they have land to compensate
Once you know where your client is and where he wants to go, you can create a plan to get him from point A to point B.
Develop a plan
Creating a plan will help your client prepare for the sale of their business and achieve their ultimate goals.
What changes are needed to achieve your sales goals?
In many cases, changes will be needed to help customers achieve their sales goals.
Do you need more staff?
Do they have standard operating procedures (SOPs)? SOPs allow the owner to log out easily without interrupting operations.
Do they need to invest in more marketing? Once you have identified what needs to be done to enable the company to sell, a plan can be developed to implement these changes.
If the customer plans to sell the business in 10 years, they may not need to be aggressive with the changes. However, if the goal is to sell for years to come, more significant changes may need to be made to ensure the staff are in place and the business is profitable enough to get the price you want.
Are you willing to finance? if so, how much?
Consider whether the client is willing to finance and, if he is open to the idea, how much would he be willing to finance? For example, a buyer might want to make a 20% down payment and pay 10% annually for the next eight years. Is this a deal you would consider? What is your risk appetite?
Financing can make the business more attractive to buyers, but there is always a risk that the business will fail before the balance is paid. Do they have potential buyers you can target?
Does the customer have potential buyers to turn to to discuss the sale? Potential buyers can be competitors, business organizations, suppliers, or even key employees.
If you have trouble identifying potential buyers, a broker can help you. Once you have a plan, it's important to review it regularly and make any necessary changes until it's time to put the business up for sale.
Keep the plan under control
When preparing a business for sale, it's important to pay attention to who is sharing the details with your customer. The time has to be right. If there is a rumor that your customer is trying to sell, a key employee may walk away and bring some tribal knowledge or key customers with them. With the right plan and strategy, you can help your customers prepare their business for a successful sale. Understanding their goals and current business status can help you develop a plan that gets them where they want to go.