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Do I Really Need to Prepare My Business for Sale?

Posted by Megan Gunsorek in Articles

You might not be thinking that you yet need to prepare for the possibility of listing your online business for sale, but all the legwork you do now could pay off in spades later on when it’s time to turn to the services of a knowledgeable business broker to assist you. When you decide to sell your online company without the assistance of a professional, it is even more important to have all of your affairs organized and a clear plan for how the business will be managed and transitioned over to the new owner.

Selling a business takes a significant investment of time, which pulls attention away from the operations within the day to day of your company. There are several different things, thankfully, that you can do well in advance to ensure that you are properly positioned to be as successful as possible with the sale of the company.

How to Approach Business Sale Prep 

First of all, start by listing the business for sale years before you actually intend to exit the company. Begin with an end in mind, and always think about what a future buyer might be looking for and the factors they would consider to be most attractive in your business. Prospective buyers are looking to see steady revenue growth, profits and a long term client base. They also want to see how that you have established traffic channels that show steady growth. The attractive factors of your company are things that you’d want to have in place even if you didn’t want to sell it in the future.

Second, know what buyers are looking for. Buyers might have different motivations, such as an investment, an opportunity, an income or any combination of those three. Buyers must feel comfortable that the business will continue to generate the income they need, even if the transition is handed over to them. These buyers also want to see an opportunity to grow that business, so creating a growth plan and looking carefully at your financial statements is crucial to improving the value of your business in the eyes of potential buyers.

One of the most important steps you can undertake to prepare for the business valuation and ultimate sale of the company is to prepare documents. You’ll want to have tax returns and financial statements that date back at least 3 to 5 years. In recast financial statements you can then can begin to present the company’s earnings to prospective buyers effectively. The goal is to maximize the presentation of the cash flow and net income. Buyers want to know specifically about cash flow, in addition to the income generating capability of your company. You’ll need to assist buyers to recognize the capability that your business has and the success that you have already built on.

Showing a Roadmap Before You Sell

Make sure that you help a buyer to see the opportunity for potential in growing that revenue even further by providing the prospective buyer with the growth plan. This is essentially a roadmap to the potential opportunities so that the new owner could step in and explore.

That plan must have an account of various capital resources where that potential buyer will have access to after the sale. The perceived value shows that potential to expand, so long as the potential buyer does indeed have the time and financial resources to invest in that expansion and growth.