How to prepare for your business valuation – and how you can increase its value
So it’s time to sell your business. You’ve had a good run, but for one reason or another, you think this is the end of the road for you and you’re ready to pass it onto another safe pair of hands. There can be a number of reasons why you want to sell, both good and bad.
But how does selling a business work? Well, a key part is the business valuation. This ensures the buyer gets a fair price and you get exactly what it’s worth. So how do you make sure you get the most value from selling your business? Here’s what you need to know about selling your business and how you can improve its value.
Before you sell
First, you need to think about why you’re selling. Selling your already established business to a new owner will go differently than if you’re a new business looking to sell a stake to a new investor. You will also have to approach it differently if you’re selling as part of liquidation.
Next, you need to lay out everything a potential buyer needs to know about the business. You’ll be very thankful if you keep your paperwork organised! Buyers will want accurate and detailed financial records – cash flow, turnover, losses, investments. They will want information about any assets or property. Any documentation about the founding of the business or any employees – they’ll want that too.
More than that, they also want to know the business they’re investing in has a good future. So your future marketing and investment plans will also be a necessity. Make sure you have business forecasts so they can see where the business is going and emergency plans if things go wrong. The more information you can give them, the better.
Increasing the value
Part of why you want to do this is because it will increase the value of the business. The more detailed your information, the more confidence buyers will have. And if they’re feeling confident in your business, they’ll be willing to invest more.
You can also try to ensure your business is on good footing before selling it off. This will require some long-term planning. Over time, you can increase your sales while lowering your expenses. And even though the end is in sight for you as the owner, don’t take your foot off the gas when it comes to investments. Show buyers the business has somewhere to go.
Make the buyer’s life easier, too. Do the hard work for them with your business plan, leaving them a guide to carrying on operations. Create a formal plan that lays out all goals and future milestones for years to come, as if you were still going to be the owner.
It might sound simple, but the best way to increase the value is through dogged preparation. The easier you can make it for the buyer, the more they will pay for your business. So get everything in order now and soon you can be selling your business for a handsome value.
If you ever need assistance with your business operations or valuation, get in touch with us here at Big Hand. Having someone with you from the start can help you make the most of your valuation. To find out more, call us on 0161 327 2911.