Spring Cleaning Your Business: Preparing to Sell in a Competitive Market

 

Spring cleaning your business this season can set you up for success in an upcoming sale and improve your day to day operations. It’s commonly estimated that around 15-20% of small businesses are for sale at any given time. A nice clean operation will be easier to run and appear more appealing to potential buyers. Sweep up those potential red flags with the tips below to rise above the competition.

Clean up those financials

Potential buyers want to see easy-to-understand, clearly organized financials. The day-to-day of running a business often results in a multitude of spreadsheets, expense receipts, and tax documents buried way down in your email folders. This is the time to spring-clean your business financials. 

  • Gather copies of all important financial documents in a dedicated folder for easy reference. Your filing system works for you, but taking the time to make copies of important documents to keep in a dedicated “for sale” location will pave the road for your next steps.
  • Organize your documents to easily find notable documents. When a potential buyer wants to see last year’s tax returns you will know right where they are. 
  • Compile financial overviews. These documents highlight pertinent items of buyer interest without disclosing sensitive confidential information: average monthly business expenses, high level profit vs loss evaluation, estimation of company assets, etc.

Prepare your financial data now so you are ready when buyers come knocking.

Tidy up loose ends

Buyers are naturally cautious about perceived risk. Tidying up loose ends around your business will overcome buyers’ concerns before they arrive. 

  • Diversify your customer base. Display the stability of your income streams.
  • Develop long-term contracts. Reliable future business will reduce perceived risk.
  • Secure well-structured employee agreements. Buyers want to know your team is stable.
  • Implement easy-to-understand and well-drafted customer contracts. Resolve any possible obstacles with customers now so they won’t arise during your sale.
  • Resolve any outstanding legal issues or potential liabilities. Some of the biggest roadblocks to business sales are legal hurdles. Catch them before they arise.

Clear as glass

The best way to reduce perceived risk in a business sale is to lay it all out clear as glass. Transparency is paramount to displaying the value and growth potential of your business to prospective buyers. After your financial clean up & loose end remediation, you will be ready to display your company’s optimum value.

Hire a professional

The right team of professionals can make all the difference when selling a business. Business brokers, M&A advisors, accountants, and legal experts help guide sellers through the complexities of the sale process. They can assist with everything from developing an exit strategy to ensuring that the sale adheres to all legal and financial standards.

Engaging professionals early in the process ensures that the seller has the right advice and support to navigate negotiations, minimize risk, and maximize the business’s value. These experts can also help identify and address potential red flags that might otherwise hinder the sale.