Here are the three questions you’ll be asked when you sell your business, that if you don’t have the right answer to, could cost you big.
By the time most business owners decide to sell, it will be too late to answer these three questions correctly. Considering that they are the first three questions you will be asked as a business seller, and that they are impossible to answer without forethought; getting the answers for them in advance will make your business more desirable, more sellable and yes, should get you more money for your investment.
So here they are; the three questions that you have to know the answer to before you decide to sell.
Why are you selling your business?
More often than not, a business gets put on the market as a reaction to something such as the owner’s personal situation changing, the business losing money, industry problems or simply that the owner is tired of it. Under these circumstances, selling your business is a necessity- not a choice, which puts you as the seller on the back-foot in negotiations.
So it falls to you to know why you’re selling before you want to sell. Quite simply; plan to sell. Telling a buyer that selling was part of your three year business plan, then showing them the plan, is much better than saying ‘I’m over it’.
Can I get a copy of your financials?
This one’s an easy one. If your answer isn’t a big ‘YES’, then you’re going to be making things very difficult for yourself. Buyers don’t buy without financials any more, banks don’t lend without financials (did they ever?) and to put a nail in the coffin, many business brokers won’t even take you on without financials.
So in short, make your answer ‘Yes’ by keeping good, up-to-date records. Essentially, make a habit of good record keeping now and your business will be considerably more sellable down the line.
How do you expect the business to perform in the future?
‘It has potential’ is not the right answer- but it’s easily the most common. This question is impossible to answer off-the-cuff because it needs forethought. Have your marketing plans ready, have copies of your business’s systems and growth plans.
Having these ready is the difference between showing someone your business and selling someone your business. This may sound like a tremendous amount of work, but in reality, when you sell a business you aren’t actually selling how profitable your business is now; you are selling the future profitability of your business- and to sell them that, you need to prove it.
So, get used to long term-planning, have a well thought out exit strategy, and don’t stop when you decide to sell. Planning for profits you personally aren’t going to make might feel pointless but in reality you are making that profit when someone buys your business.
Is that all? Of course not! There are plenty of questions you’ll get asked when selling your business. We picked these three because they are the three top ones you can plan for today for extra money in the bank when you sell.
Want to know more about selling your business? Call Xcllusive on 02 9817 3331 and speak to an expert consultant today- Sell your business with certainty.
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