5 Things To Do Before Selling Your Turnkey Business
Building a business from scratch comes fraught with struggles and anxiety, as you must be well aware. Having seen the various phases in the growth life cycle and having dealt with them successfully, you might have reached a stage wherein you’re contemplating putting your turnkey business for sale. And why not, with a prevalent eCommerce boom this might be as good a time as any. Moreover, a turnkey business is inherently more attractive to buyers. Why do you ask? Well, because turnkey businesses are already well placed to start providing an income right from the outset. Having said that, you still need to put in the effort to ensure you get the best value for your turnkey business for sale. Here are 5 of the key things to do to achieve this objective.
- Organize Your Financials
As an experienced entrepreneur, this must already be a part of your habit. But before getting your turnkey business ready for sale, organizing the data regarding your business’ financial performance becomes essential. Any potential buyer is going to be immediately interested in the current financial health of your business. What they are looking at specifically is to identify the risks. High debts or liabilities, and negative cash flow, are just some of the aspects that are likely to put the buyers off. Putting together your profit and loss statements, accounts receivables and payables, salary and infrastructure expenses, and sales and revenue figures beforehand helps you identify the gaps and potential weaknesses. This, in turn, gives you an opportunity to plug those gaps and make your turnkey business ready for sale more attractive to buyers.
- Collate The Paperwork
Apart from your financials, you should also focus on collating all the relevant paperwork associated with your business. Tax statements, registration and ownership certificates, legal and regulatory compliances, vendor and supplier agreements, etc. are just a few of the documentation that should be properly organized. Having well-documented Standard Operating Procedures (SOPs) and business processes is also highly recommended as it gives buyers confidence in the continuity of your business under new ownership. It is important to note here that all this information should not be shared with potential buyers freely without a formal non-disclosure agreement (NDA) in place. This, too, should be a part of the paperwork that you gather as part of this step.
- Take Stock
Stocktaking encompasses multiple aspects. While it, typically, begins with the inventory of products for sale, it also goes on to cover the technical infrastructure that you have put in place (including hardware and software). Licenses, subscriptions, cloud storage, security infrastructure, website hosting and platform usage too should be accounted for. To sum it up, through the first 3 points on our list, you should have thoroughly done your business housekeeping and organized all the financial and operational aspects of your business for your review as well as for potential buyers to go through.
- Get Your Business Valued
With your groundwork thoroughly in place, it is time to put a price tag on your business. While your current financials serve as a good benchmark to arrive at an estimated selling price, they do not tell the entire story. It is recommended to get your business valued by professional experts who will take into account the intangible factors as well. The age of your business, popularity, brand recall, average customer reviews, online traffic, social media buzz and many other factors combine to establish a price that you should seek in the market.
- List Your Business
Having taken all the aforementioned steps, you are now ready to list your turnkey business for sale. The listing can happen via several mediums. You can choose to sell through your private or professional network, list your business in an online marketplace, sell to a competitor or utilize the services of a broker. While selling privately or to a competitor can be convenient and quick, it leaves you exposed to hard negotiation sessions. Brokers, on the other hand, can smoothen the proceeding but in turn, they will charge you. This can be a fixed fee or a commission as high as 10-15% of the sale amount. Different options have their own merits and limitations, and you need to consider them carefully before making your choice.
In Summation
The decision of selling your business needs to be carefully thought out. The process can be long and test your patience and tax your resources. Be prepared mentally and otherwise. Many owners have turned to professional acquirers to sell their businesses. These companies specialize in the business acquisition process and offer professional consultation to ensure you are not shortchanged in the process. This is especially beneficial for first-time sellers. Click here to know more about putting your turnkey business for sale.
