Preparing a Business for Sale

Careful planning and the right timing can increase your profit

By Judith Earley

Selling your business may be the biggest deal of your career. Whatever your reason for selling, it is a transaction that will affect you both financially and emotionally. Some points to keep in mind:

The buyer is investing in the future success of the business.
You can almost always increase the purchase price by planning carefully and choosing the right time to sell.

Start early

Assess your books and prepare financial statements and projections that demonstrate to potential buyers your business' growth and revenue potential.Small-business buyers particularly want to see cash-flow projections.
Try: Save time and organize your financial statements with PlanWare.Use this cash-flow projection tool from the Michigan Small Business and Technology Development Center.

Set your asking price

Weigh your financials and then figure out what your business is worth.
Try: Get a valuation report from BizBuySell.com, an online business-for-sale marketplace.Find what comparable businesses sold for in your region with a report from BizComps.Or get your business appraised by a member of the Institute of Business Appraisers, the International Business Brokers Association or the National Association of Certified Valuation Analysts.

Create an operating manual

Put together a procedure manual that documents exactly how to best run the business; include all unwritten rules and undocumented techniques.
Try: Create a customized manual with WriteExpress, or use Pathworks' Ambient software that automatically converts free standing documents into active checklists that are easy to use.

Review your leases

Make sure the lease does not expire or come up for renegotiation at the same time you want to sell the company.
Try: Use Real Estate Lawyers.com to find an attorney to help you renegotiate.

Preparation is not overnight: The day you open a business is the day you should begin preparing it for sale.
Keep employees in the loop: Don't let loyal employees find out about the sale of the business from a third party.
Check your contracts: Terminate contracts serve little purpose or drain financial resources.
Reevaluate your location: If your current site might cause problems for the new owner, consider moving before the sale.
Control the process: Don't let yourself be rushed into a bad transaction.
Eliminate problem accounts: A new owner won't want to deal with customers who are troublemakers or who are used to receiving special treatment. Cut them loose.