Nothing scares a buyer more than a delay in time. Let’s say a potential buyer wants to see the last three months’ Profit and Loss Statement compared to the previous years. If you use a system such as QuickBooks, this will take only a couple of minutes to produce. But if you are not prepared and it takes weeks to obtain this information, the buyer will start to get nervous and the deal can be jeopardized.
Having the right systems in place will help position your business in the best possible light to attract qualified, motivated buyers who will pay top dollar to help you realize your long-term goals. Many of the right systems likely already exist. Below is a list of some items that you should discuss with your professional advisors as you contemplate selling your business.
Accountant: Let’s start with your accountant. Potential buyers want to know that your business is operating as efficiently and economically as possible. Make sure your accountant comes in at least quarterly to keep your Profit and Loss Statement and Balance Sheet accurate and up-to-date. Using a software-based accounting system is crucial; while the days of shoeboxes filled with scraps of paper should be long gone, we still see it often.
Financial Planner: Another important component of your system is a financial planner who understands your long-term goals. Figure out how much money you need after the sale for retirement, for your next investment, for your next business, etc., and then make sure that your business (which is usually your largest asset) is capable of delivering that profit.
Attorney: You cannot underestimate the importance of having a trusted, knowledgeable attorney to help you prepare your business for sale. Your existing contracts are of particular importance. For example, can you assign your lease without your landlord’s consent? Many commercial landlords will require business owners to personally guarantee a lease. This usually occurs when the business is new and the owner does not have a track record. Sometimes the landlord will not budge. Many owners will personally guarantee the lease to get the space but will forget about the personal guarantee. When it is time to sell, you are still on the guarantee, and the landlord can keep you on the lease even after the sale, sometimes for months or even years.
Technology: Technology is another important aspect of the systems that need to be in place before and during the sale process. Computer and telephone systems, for example, need to be functioning well for the needs of the business, but without long-term commitments that might limit the new owners’ ability to implement changes.
Likewise, your website needs to be current, with both functionality and content. E-mail systems should be secure and protected with multiple backups, both on- and off-site. If you warehouse products, your shipping and receiving systems need to be easily transferrable to a new owner.