Forward planning and preparation, ideally a few years in advance, will increase your chance of getting the very best price for your business.

Whether you’ve already found the right buyer, are looking to list your business for sale, or you’re handing it over to family, you’ll want to increase the price as much as you can as a reward for all the years’ hard work you’ve put in.

Reassure the buyer

A good starting point is to put yourself in the mind of a potential buyer. Having a business that makes a good profit might seem to you the easiest and most obvious way to appeal to a buyer, but it’s not the only measure. There are many other concerns that are likely to run through a buyer’s mind, some of which are harder to fix than a drop in profit.

In any initial pre-sale document or discussion, a prospective buyer is likely to want to know if:

• Existing customers will stay when you leave.
• You’ll sign a non-compete clause.
• The business systems and processes are efficient and documented.
• Key staff will remain after the sale.
• The business or industry is growing.
• There are high barriers to entry for possible competitors.
• The business will continue to produce a strong cash flow.
• New technology or innovations will help make products and services future-proof.

Demonstrating that the business is not only profitable but also sustainable and well-positioned for future growth will significantly increase its appeal to potential buyers.

Develop an operating manual

Documenting everything you do in the form of an operating manual will help a buyer see how the business operates. This should contain all the working guidelines, policies and procedures that are used to effectively run your business on a day-to-day basis.

For example:

• Details of how the work is carried out, such as invoicing or shipping.
• Which marketing tactics have worked best and how you’ve kept your best customers.
• The systems you’ve developed for efficiency.
• What financial tools you use to monitor the business.
• The most important customers and the relationship.

Record as much about your business as you can, so that you can hand over a manual showing how your business works and all the success factors and trading tactics you’ve used to make money.

An operating manual increases the value of your business as it helps the business become more of a turn-key operation where things are all ready to go. Buy the business, turn the key, and watch it kick into life.

Fix anything that needs fixing

You’ll increase the value of your business by making sure all the little things are fixed before a new owner looks at things in-depth.

For example, you should look at:

• Restructuring any debt and considering how this will look on your balance sheet. It could be useful to amend business loans to move them from short term to long term debt.
• Update signage and marketing material. A good first impression when buyers come to view your business is crucial.
• Review internal processes such as ways you collect your cash faster. Improve them if you can. It could be something as simple as being able to collect mobile card payments on the spot.
• Make sure that your administration systems are as automated as possible. For example, you should be using accounting software to track the business finances, rather than a spreadsheet.

Making these improvements will help you present a more polished and efficient business.

Groom the business

Preparing your business for sale involves presenting it in the best possible light to maximize its value. Focus on the following key areas:

• Forecast your net profit for the coming year to demonstrate business health.
• Improve working capital by selling under-used assets and managing stock and credit more efficiently.
• Enhance customer experience to boost return business.
• Make sure tax records are up-to-date and resolve any outstanding issues.
• Review staff and inventory for cost efficiencies.
• Strengthen supplier agreements and consider retention incentives for key employees.

Addressing these areas will help you create a more attractive and financially stable business for potential buyers.

Outline your competitive advantage

Any prospective new owner will value your business more highly if they are confident it will continue to grow and provide a healthy return on their investment.

• It’s important to clearly demonstrate that your business has a strong competitive advantage:
• Collect testimonials and evidence from existing customers detailing why they chose your business.
• Create a competitor SWOT analysis, which profiles what the competition does well, and where they are failing.
• Develop a unique selling point (USP).

Clearly highlighting your business’s unique strengths and demonstrating its ability to outperform competitors will position it as a valuable and attractive investment for prospective buyers.

Next steps

• Document your processes, systems, and success factors to provide a comprehensive guide for the new owner, making the transition smoother and increasing the value of your business.
• Address any small but significant improvements, such as updating marketing materials, restructuring debt, and automating administrative systems, so that your business presents as efficient and well-maintained.
• Present your business in the best possible light by improving financials, enhancing customer relationships, and making sure key agreements are in place to create a solid foundation for the new owner.
• Develop a clear narrative around what sets your business apart from competitors, showcasing its strengths and future growth potential to attract

Getting the best price for your business means planning well in advance, even if the sale is years away. It’s essential to spend time getting your business into top shape, even restructuring it, if necessary, to make it more attractive and the sale more tax-efficient. Lean on your advisors for advice to help you make a plan.