Wrapped up in the excitement of selling your business, you run the risk of making rookie mistakes, and nothing repels prospective buyers quite like rookie mistakes. Clean books and organized documentation could be the leg up you need to clinch a deal. However, faced with a cluttered storage closet — a common situation resulting from years of operation — getting records organized can feel daunting.
The record management process before a sale doesn’t have to include pulling your own hair out. There are practical, actionable steps you can take which will not only make your life less stressful, but also improve the likelihood of a profitable sale. So, where do you start?
How to get organized
Hopefully, over the years, you have incrementally improved record keeping. If you practiced regular organization over the years then hunting down tax forms and income statements won’t be too difficult. If not, well there’s no better time than now to get things organized.
Whether it’s as simple as visiting the correct filing cabinet, or you need to actually get your hands dirty uncrumpling old documents, getting organized at the outset of the sales process is a crucial first step to selling a business. This is all well and good, but how do you even know which documents to collect in the first place? To answer this question you might need to think back to the days when you were on the other side of the business purchase.
Think like a buyer
Put yourself in the shoes of a prospective buyer and consider which documents you would be most interested in reviewing. Chances are that you, at one point, bought the business you’re now prepping for sale. Now it’s time to remember what it felt like to be on the other side of the deal.
Try to remember what it felt like to be a buyer, and reflect on which records positively affected your decision to sign the deal the most. Practicing this little exercise in empathy might seem minor, but sometimes the most seemingly insignificant actions can make the difference you need to secure a buyer.
Get professional help
It’s very likely that you will need the help of a CPA, but that doesn’t mean you’re completely off the hook. There are a couple things you can do in order to help a CPA do their job to the best of their ability.
Going off the previous points, you must practice due diligence on your own before you call in the professionals. It’s up to you to hunt down and collect certain documents spanning over the last couple years. A professional accountant will need documents such as profit/loss statements, cash flow statements, tax returns, and many more. Consult your CPA for a more comprehensive list of necessary documents. You can best set yourself up for success if you put in the legwork long before a CPA even enters the picture.
You have all of your documents in place, but what do you do nowt? With the hunting and gathering process in the rearview, it’s finally time for the fun part: putting your business on the market.
The selling process generally takes a couple of months, but there are ways in which you can help your business get noticed by the right people:
- Broker — Many people choose to partner with a broker to sell their business. While a business broker requires an investment, they can be helpful for business valuation, industry connections, and closing deals.
- Online business marketplace — List your business on an online business marketplace where thousands of prospective buyers can discover your business. This DIY approach to selling a business requires no broker fee and gives sellers complete power over sale proceedings.
Whether you choose one or both of these options, don’t try to go it alone. The help of a team — from CPAs to consultants — is a valuable, non-negotiable aspect of the sales process. When it comes to selling a business you are only as good as the sum of your parts. So, remember to breathe, start with the small stuff like record management, and the rest will fall into place.