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Selling your business in Victoria can be bittersweet, especially if you were the one who built it from the ground up. Sometimes selling a business is necessary, though. For instance, if you're at retirement age and don't have it in you to continue taking your business to new heights, then you may need to pass it on to a younger entrepreneur who can carry on your legacy. But how do you even begin to start selling a business?
In this article, we'll take you through some steps to simplify the process of selling your business in Victoria so you'll have a good idea of what to expect.
1- Consider why you're selling
When you're putting your business up for sale, you first must ensure you know exactly why you're selling your business. It needs to be for the right reasons, or else this transaction can lead to a lot of disappointment and problems. Buyers will want to know if the business is doing well and don't want to take on something that will be a liability. So they will ask, "Why are you selling your business?". If you intend to sell because of financial issues, maybe you should approach a business advisor for advice before selling to ensure you've covered all your options. This is a great step to ensure you're selling for the right reason and not just out of desperation.
2- Decide if you need a broker
When moving forward with wanting to sell your business, one of the most effective decisions you'll make is whether you need to hire a business broker or not. In most cases, hiring a business broker in Victoria will help you handle the sale is wise because you'll have someone dedicated to reaching out to their network of potential buyers, offering advice on how to increase the profitability of the business, helping you get your business's books in order and so making the sale less stressful for you as a whole.
3- Get your documentation in order
In preparation for the sale, a major contributor as to whether you'll get a few potential buyers is making sure that your core documentation is in order and in good-standing. Prospective buyers will expect to have at least three years' worth of statements, so ensure that you've prepared in advance. The core paperwork you need to worry about are:
Profit and loss statements
Leases
Equipment lists
Contracts
Employee details
Material records
Licences
Systems
4- Get your business valued
Until you have your business valued, putting a price on it is a big mistake because you don't actually know what price it should be selling for until you take this step. Hiring a business broker means you'll have a professional who can accurately evaluate your business. Here are the most common valuation methods used:
Analysing your market
Using return on investment (ROI)
Calculating your business's net worth
5- Market the business
Once again, this is something that a business broker could handle, but if you choose to sell your business on your own, marketing is pivotal. There are several different methods you can use to promote the sale of your business by yourself, and this generally includes marketing your business online, going through word of mouth or reaching out to professionals. It's helpful to have an information packet available for potential buyers so you can have a glimpse of what you're selling. It's also important to be discreet and have non-disclosure agreements in place to protect your sale.
6- Participate in negotiations
Once you've received a few serious offers for your business, it's time to begin negotiations to reach an agreement on the key terms of the sale. It would be incredibly helpful to enter into a non-binding head of agreement (a document that outlines the key terms of sale that will be worked into the final contract) as this will aid in getting the terms of the sale organised. It's always wise to get things in writing because while this document isn't legally binding, it helps both parties flesh out everything that needs to be looked over with lawyers.
7- Sign and close the deal
Finally, once both parties are satisfied with the negotiation outcome, it will be time to sign the formal binding contract of sale. Upon signing the contract, the deposit for the business sale will need to be paid into a trust and released once the settlement is completed.
Final thoughts
Selling a business can be overwhelming at times, especially if you need to get a lot of administrative work sorted before the sale. Hiring a broker makes this process so much smoother, allowing you to focus on the work in front of you instead of the sale taking all your time. Consider the tips above before you sell and implement them in your sales strategy. You'll find that this makes your sale much easier.
This information is of a general nature only and should not be regarded as specific to any particular situation. Readers are encouraged to seek appropriate professional advice based on their personal circumstances.