There's one thing you must do before anything else if you want to maximise the sale price of your business: remove yourself from it. The greatest businesses can operate profitably for a year or more without the owner’s attention.

Few of you will have the luxury of leaving your business for over a year, but try to minimise your involvement in the business to show prospective buyers it can be run by anyone.

Once you’ve done that, get on with preparing your business for sale.

Bricks and Mortar

· Provide solid, audited financial records to prospective buyers. These show your business is making money. Give prospective buyers financial records for the past three to five years, or failing that, explain how you have ‘grown’ the business during your time at the helm.

· Your accounting system should be efficient and easy-to-understand. There’s no bigger turn-off than facing a minefield of paperwork after purchasing a business, and a sloppy accounting system will dramatically lower your sale price.

· A systems and operations manual is a major selling point. Popularised by franchises such as McDonalds and Lenard’s, a systems and operations manual gives potential buyers a blueprint for success. The systems and operations manual should be designed so the business runs with your minimum involvement, delegating tasks and catering for every eventuality.

· A quick turnover of inventories shows the business has customers. The discount chains that have sprung up over the past few years – Solly’s and Crazy Clark’s are two examples – are experts at using turnover speed as a profit-maker. Their margins might not be great, but their turnover is massive because of the heavily discounted prices.

· ‘Hard assets’ are also important. Your business name, staff and branding are ‘intangibles’ - their price is incorporated into the sale price of the business, but your prospective buyer cannot liquidate them if the business fails. More hard assets mean greater leveraging power.

· Finally, explain your marketing efforts to any prospective buyer. Tell them what makes your business unique from the competition. Show prospective buyers why it is better to buy your business than another, or worse, start a competitor themselves.
 

Presentation

· Few of us would show a messy house to a prospective buyer, and the same applies to your business. Do your housework – a comfortable and tidy operating environment is essential.

· Look at the weaker points of your business and negate their dragging effect. Be honest with prospective buyers about any flaws the business may have, but help them come up with a solution for these flaws. Maximise the sale price of your business but make it a win-win situation for both of you.

· Show prospective buyers through at a time of the day when customers are constantly coming and going. As the host, it’s your job to stay with the prospective buyer at all times. You won’t have to stay quite as close if a broker is escorting them, but prospective buyers still like meeting the owner and gleaning their personality.

· The staff should be wearing the proper business uniform with their nametags or badges clearly displayed. Prospective buyers may want to talk to the staff to gauge morale – let them. Above all, don’t try to act like the staff’s benevolent mother/father figure or ‘buddy’ if you’re not. They may back away from you rather than continue the charade. After all, they have nothing to lose.

· A final word on staff: make sure they get along. Your staff should be a cohesive working unit, and staff differences will only negatively affect your sale price. Speak to any feuding staff before a prospective buyer comes, asking if they can resolve their differences.

· It’s a good idea to furnish the prospective buyer with a few customer testimonials. Hopefully some of your regulars will visit, showing the prospective buyer you have repeat business as well as satisfied customers. If your worst nightmare happens and a disgruntled customer shows up, pray you have a systems and operations manual – referring to one is the most efficient way to deal with a complaint.
 

The Pitch

· Everyone likes feeling welcome, and a buyer ‘pitch letter’ will go some way towards creating that feeling. The pitch letter should be very much like a Chairperson’s letter in an annual review, highlighting what you have achieved so far and illustrating business goals for the future.

· You may even want to expand on the pitch letter by creating graphs displaying growth trends and the business owner’s hourly pay rate.

· Highlight opportunities for immediate growth and later expansion. ‘Challenge’ prospective buyers to exceed what you have done with the business. Give prospective buyers some enthusiasm and drive. Make them believe they can do better.

· Be careful of creating a non-existent third party – people are often quite sceptical of anyone who says, “Someone’s really interested in it, he’s coming in this afternoon to write the cheque.” It is generally best not to tell a prospective buyer about a third party unless you actually have one.

· Finally, give any prospective buyer a ‘guided tour’ and some on-the-job experience. Their enthusiasm for the work may outweigh their other concerns and that puts you into an excellent position for negotiations.
 

Conclusion

· Carry on business as usual while you’re selling – don’t become so caught up in the selling process that the business itself suffers as a result.

· If possible, sell when the market is up. The property and business markets are down at the moment and prices have flatlined because of it. It may be irritating if you’re keen to sell, but patience is a virtue and often worth thousands of dollars.

· Everyone’s after the best deal for his or her business, but both you and the buyer want to conduct the transaction at ‘fair market value’. Maximising the sale price of your business isn’t simply a question of trumpeting its good points and sweeping its bad points under the floor; it’s a matter of showing the potential behind the business, and what can be done with it in the future.