It is crucial that you understand what steps you can take to get the highest price for your business. Getting this wrong can leave many thousands of dollars on the table, money better in your pocket.
Steps To Pricing Your Business
1. Have Your Business Valued
More often than not a person who is selling their business as a private seller will be leaving value (their money or life savings) on the table because businesses are very difficult to value and it is a specialised area with not a lot of data available to the public like there is in real estate. For a few thousand dollars you can get a professional valuation from a qualified business valuer.
They will provide data on what businesses have been sold and at what price they were sold and it will be specific to your industry.
Armed with this information will allow you to go to the market at a market related price. Any low ball offers can be rejected with confidence while you wait for the genuine buyer that will pay a fair price.
Many times a seller will reject a very good offer simply because they don’t know that the offer is fair and reasonable. These sellers may have to then wait for years to find another buyer or fail to sell their business at all.
2. Research The Market Yourself
There is a wealth of information on the internet. You can simply go to our business for sale listings and search for similar businesses, with a similar size in similar locations. There are also other sites that list businesses for sale. You can also search for blog posts providing information on how to price your business.
3. Sale Document
Buyers of Australian business for sale like lots of detail and a well written sales document (often referred to as an information memorandum) will be invaluable in the sale process. This document will contain the history of the business, some industry information, staff details, lease and property details, plant and equipment included in the sale and at least 3 years financials (Profit and loss statements).
The financials will be accompanied by an add-back schedule which identifies any discretionary expenses by the owner, finance expenses and any non-cash items to establish what the proprietors earning will be when they purchase your business.
This document is the initial window to your business and the better it is prepared and presented the better the process will go.
You can either prepare this document or seek assistance from a professional
Buyers love systems and documented systems even more so. A business with an operations manual will have a very big advantage over the business that does not have a manual.
Similarly a physical business that is very neat and tidy has an advantage over the untidy business where you have to step over or around the mess. Make sure the reception area is tidy and that stock is clean and tidy and easy to find.
Make sure your premises look professional and if necessary a quick coat of paint could add thousands to the value of the business
Good accounting and computer based stock control systems will always stand out. Automation of systems will make it much easier
Ensure your digital assets and marketing platforms are modern, functioning correctly and provide a stream of customers. Ensure you have trackable data of leads and conversions that you can show proof of customer conversion.
Check these assets
- Your website
- Your social media presence
- Google Adwords, google maps and google business listing
- Advertising campaigns
- Print and other types of marketing
If you need a review of your digital assets you can get in touch with Streamshare Digital Marketing. They will review your current assets and if necessary recommend any minor changes that will help with the sale.
5. Write A Great Advertisement For Your Listing.
If you choose to list your business here then we have set up our listings to ask you lots of questions that will help you create a compelling and comprehensive advertisement that will paint a great picture of your business. You can also load images and videos that can tell their own story.
The more information you provide, the more value your business will have.
6. Professional Assistance
If you are unsure that you will be able to get the best price for your business and handle the sale then using an experienced business broker is definitely a sound strategy in getting the best possible price.
These people know value, usually have a large data bases of buyers looking for a business and are good at presenting the business.
A good broker will well and truly cover their costs with the extra work they do in securing the right buyer for your business
There are a lot of important steps to consider when selling your business, or concession planning, the most important being how much you would like to sell your business for.
The value of your business should not be up for any rules of thumb, industry averages or guess work. Leave it up to these methods and you could be walking away from tens of thousands of dollars.
The reality is that each business is unique and there are just too many variables that can impact on the value of each business.
This is why you need to accurately determine the value of your business, and seeking the help of a licenced valuer should be a priority and at the top of your ‘things to do list’ when selling your business.
Ultimately a business is worth what a buyer is prepared to pay for it on any given day. So its the negotiation process and those that you appoint to sell the business on your behalf that need to be well versed in the attributes that drive business value.
They can then communicate these attributes to reach the best price possible, with potential parties interested in buying your business.