How To Prepare To Sell Your Business

We’ve brought you the tools you need to create a low cost startup, helped you secure business funding, and inspired you with the most competitive fields to start a business in, but if the time has come to sell your business, we’re here to help with that too. People choose to sell their businesses for so many different reasons.

Whether you’re looking for profits or to start a new passion project, this guide helps you to prepare to sell your business.

How To Sell Your Business

Selling a business in the UK or indeed anywhere can come with intricacies and complications and so, understanding the process behind selling your business, which is likely to be one of your most valuable assets is important before committing to doing so and starting the process.

Organise Your Books and Crunch Your Numbers

For some people, this is by far the worst part of selling a business. It’s so important to actually understand where your business is at financially before attempting to sell it. Check over your books for any anomalies, and figure out key statistical information about your business. Metrics to consider finding out include: number of customers, gross sales, net income, and outstanding liabilities.

Do The Jobs You’ve Been Putting Off

If a potential buyer is seriously interested in purchasing your business, they’ll likely want to carry out their own due diligence. This helps the buyer to be sure that they’re actually getting a good deal. To make sure potential buyers won’t be discouraged by their own checks, you should aim to:

  • Make sure all contracts associated with the business are up to date.
  • Present clear information about shareholders, assets, liabilities and properties.
  • Prepare your documents, including your tax returns.
  • Ensure that you business has protected its intellectual property (including company name, domain name, and amongst other things, trademarks).
  • Insure your business.

Figure Out The Details

When trying to sell your business, it’s really important for you to have a plan in place and know what you want to achieve, and when. It can be really helpful to consider these key questions before selling your business:

  • Are you selling the whole business, or just the assets?
  • Are you bothered about who the buyer is?
  • When do you want to sell?
  • Are you entitled to entrepreneurs relief (read more here)?

Many people aren’t too fussed about who they will sell their business to, but others have strict criteria that potential buyers have to meet. Some people choose to only sell their business on to family members, friends, or employees.

When you choose to sell your business can have a bit impact on now only the amount you’ll be able to sell it for, but also how smooth the process of selling your business will be. There’s no ‘right time’ to sell a business, but it’s usually a good idea to consider selling your business when profits are high. This makes your business more appealing to potential buyers. There may also be more interest in your business from buyers if you sell when economic markets are expanding.

Get a Business Valuation

In a similar way to how you’d get a house valuation before selling your home, you should also get a business valuation before selling your business. Much like in the case of selling a house, where you may even simply search online for something like ‘instant online house valuation‘ to get an idea of how much you could make with an instant sale, there are some tools online for selling a business that can provide indicative pricing. You can choose to value your business yourself (taking into consideration everything from profits to your business’ reputation), but we’d always recommend getting the help of a professional to take the burden from you.

The valuation of your business is not necessarily what it will sell for, but it’s a good starting point. As with all types of business, there’ll probably be haggling involved here, and you’ll need to be able to justify your valuation. This is why we recommend leaving it to the experts!

Create a Sales Profile for Your Business

Think of this as a CV for your business. You should include details about why you’re selling, what the business does, it’s potential for growth, and anything else that will attract potential buyers to your business.