6 Must-Know Tips When Selling Your Business

Selling your business can be simple by following these 6 tips

Selling a business can be a monumental decision, one that requires careful consideration and strategic planning. Whether you're just starting to entertain the idea or actively preparing to sell, there are key factors to keep in mind to ensure a smooth and successful transaction.

At ActionCOACH, we understand that deciding to sell your business can be a daunting task with lots of factors to consider before taking the plunge. We've guided many of our clients through the process of selling their business. There are many factors involved such as setting your team to succeed to getting the best price for your business. In this article, we give you our 6-must know tips you need to know when selling your business.

Tip 1: The Timing & Business Industry

Timing is crucial when you're selling your business. To get the best value for your business you need to consider both internal and external factors. Investors will look at what's happening within your business and in your industry to determine whether they should invest. Here are some factors to consider:

• How is AI affecting your industry?
• Are there any emerging trends that may affect your business?
• Are there any advancements happening in your industry currently?
• How is the overall market growing?

Markets will always be going up and down. Asking yourself these questions will help you sell your business when your industry is at its peak. This will ensure you sell your business to the right investor and maximise the value of your business.

Tip 2: Your Business's Cash Flow

When an investor is looking to purchase a business, the most important factor for them is cash flow. When we think of cash flow we automatically think of wanting to obtain the highest numbers possible. However, an investor will be looking for one key thing: consistency.

A consistent cash flow stream provides investors with assurance regarding the business's ability to maintain stability over the long term. Have your cash flows been strong and consistent over the past 3-5 years?

What should you do if your cash flows haven’t been consistent? Once you have analysed your numbers from the past several years, you can start to build a plan on how to strengthen them on a short and long-term basis. If you need help on where to start with this process, speak to one of our advisors for free to help point you in the right direction.

Tip 3: Growth & Profitability

The next factor you want to look at is growth within your business. Investors are attracted to businesses that show growth and profitability. Evaluate your business's growth trajectory and profitability trends over the past few years. Areas of growth could include:

• Expanding your products/services to suit current customer needs
• Hiring new staff members
• Making your team more effective to increase profitability
• Implementing new technology to streamline operations

Remember, growth is not just about the numbers. You need to show a potential investor your profitability growth and other areas of growth in your business. This gives a potential investor the full picture of what your business could offer them.

Tip 4: Is Your Team Working Without You?

When you’re selling your business you’re also selling the team who works in your business. Investors seek businesses with strong leadership and a competent team in place.

Do you have a strong senior leadership team in place to help with the transition? Are you team members being as efficient as they could be? Do you have training and development plans in place? All of these factors can make an investor more likely to purchase your business because having a strong team already in place means less for them to do once the purchase has been made.

When selling your business, it is crucial to be transparent with both your senior leadership team and employees. A change of ownership can be a significant adjustment for many employees and lead to disruption of their day-to-day tasks. Keeping your team in the loop with ensure a smooth transition and lead to fewer issues once the ownership has been handed over.

Tip 5: What's Your Number?

One of the most important factors in selling your business is determining your business’s valuation. Your valuation will depend on various factors, including profitability, market conditions, and industry trends. We recommend to get a professional valuation to make sure you’re not setting your price too high or too low.

Another factor that will determine your business’s valuation is more personal. What valuation would enable you to achieve your desired lifestyle and financial security? Have you considered your personal financial goals? Would you like to retire or are you planning to start another business? Understanding your bottom line will help you negotiate effectively and make informed decisions throughout the selling process.

Tip 6: What Happens After You Sell

Selling your business can be an emotional experience. You’ve spent all this time, effort and investment to build your business up to where it is today. Most business owners don’t know what to do with themselves after selling their business.

Take the time to envision your post-sale plans and consider how you'll transition into the next phase of your life. Would you like to start another business or invest in a franchise? Would you like to focus on pursuing your interests? Have you considered helping other entrepreneurs through business coaching or mentoring? 

This is a big decision to make but you don’t have to make a decision straight away. If you’re struggling with what you should do next, then seek professional guidance to explore opportunities for personal and professional growth.

Selling your business is a multifaceted process that requires careful planning and consideration. By adhering to these six must-know tips, you can navigate the complexities of selling your business with confidence and maximize its value in the marketplace. Remember, preparation is key, so take the time to assess your business thoroughly and seek expert guidance to ensure a successful transition.

If you’re struggling with this process or need support during the transition of ownership, speak to one of advisors for free to see how we can help you during this process. Alternatively, visit our learning centre for more free videos and articles to help you and your business succeed.