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If selling business is not what you do for a living it is best to learn lessons from others.  Most business owners will not get a second chance to do it well, and it is such an important process for your employees, your customers, and your bank account that you want to maximize your chances of success.

I have been involved in over 100 business purchases and sales, mostly up to $20 million value range and have seen the good, the bad and the ugly of business acquisitions and sales.  Here are some battle scarred tips in selling your business

1. There is no perfect time to sell

The two biggest timing factors indicating a good time to sell are when your business is doing well and when the economy is strong.  There are other personal and industry factors which may override the apparent wrong time to sell into the right time to sell, including your health, age, motivation, funding issues and the trends in your industry.  Don’t wait forever for the perfect time because the right time may be now.  I have seen too many business owners wait for the perfect time only to eventually close the business because the time had passed.

2. You should have already started your preparations to sell

Stephen Covey, author of books including “7 Habits of Highly Effective People” says “begin with the end in mind.”  You should start working on your end game, the day you start your business, because many of the tasks to maximise your business value and make it easier to sell are simply good business practices.  These include making profits, documenting systems, developing your management team, having good financial records and effective management of working capital.

As a guide, mid- market businesses should start preparing around three years before they want to sell and smaller business at least 6 to 12 months beforehand.  Out of frustration with the money destroyed by inadequate preparation, Endeavour Capital has developed an Exit Ready program for small and medium sized businesses.

3. Appoint the right adviser

For most business owners selling their business is not something that they have had experience in.  It may be feasible to sell the business yourself, but depending on your skills and the size of the business, that may well be a false economy.

Endeavour Capital can work with you to

* identify potential barriers to sale prior to going to market and suggest areas for improvement

* market your business beyond your networks and seek to identify the potential buyers who may pay more than a traditional price for your business

* prepare documents to highlight the key attributes of your business

* give feedback on the most probable range of selling price

* keep your eyes on your business by talking with buyers, preparing documents and providing a buffer to allow your business to stay on

* project manage the sale of the business using tested process

4. Get your house in order

If you have potential buyer(s) interested, your want the buyers to be able to progress through their due diligence process smoothly.  This means having all relevant documents and agreements in place and available for release at the appropriate time.  A buyer does not know your business and is naturally suspicious, so being organised gives the buyers the impression of a well-managed business.

Also look at the physical appearance of your business.  What message does its appearance convey?  Experienced buyers (and their advisers) can pick up the feel of a business by walking around the premises.

Nothing scares a buyer away quicker than poor financial information.  Make sure that your accounts are accurate and up to date.  Also tale the time in the years before selling your business to clean out any skeletons and personal items for your companies accounts.

5. Key person risk – it should not be about you!

The biggest thing is that buyers want to buy a sustainable business.  They want to have a business that can operate for the foreseeable future without relying on you.  The more that the business revolves around you, the lower the value and the more difficult it is to sell.

For medium sized businesses, owners can reduce the reliance on them by developing a strong management team.  A potential owner should be willing to pay more for a management team with depth as it reduces the key person risk for them.

In smaller businesses the best way to reduce the transition risk for a new business owner is to document the processes in your business to make it easy for them to take over the business.  These documented processes also give greater comfort to the potential owners bankers.  The process do not have to be 100 pages of padding – just bullet points of a typical day, week, month and quarter.

Regardless of the size of the business, at some stage you will be retiring from your management role and will need to transition your role in the business to other people.  You can do that before the sale or after the sale, but you can be rewarded for it if you do the transition before the sale.

6. Take a reality pill

Of course you want to maximise the price for your business.  However, a transaction can only occur if there is a buyer and a seller agreeing on price and terms.  Ensure that you have a realistic expectation on the likely sale price of your business.  If we can get your more, that is fantastic but don’t expect miracles.

7. Keep your cool

In most sales there is one or more moments where people get freaked out and more often than not it is the vendor.  Selling a business your have built over many years is an emotional event and a buyer asking what you consider to be silly or insulting questions is just too much.  Just count to 10, keep your cool, act professionally, put yourself in their shoes and leave it to Endeavour Capital.  The buyer does not know the business as well as you and wants to be sure of what they are buying and they don’t want to purchase a dud.