Published : 31 August 2015
Selling your business is one of the most important decisions you'll ever make, so you want to be sure to do it right, and get the best possible price with the least amount of hassle.
People sell their businesses for a number of reasons: perhaps you no longer want to run it; or it's not making enough money for your needs, or you'd like to retire.
Either way, it can be a challenging task, so it's important to get the right people involved to help you.
One of the first decisions to make is whether to use professionals - and that doesn't necessarily mean a broker. Considering you know your business inside out, you might decide to market it yourself, with the help of an organisation such as Coast to Coast Media.
Coast to Coast Media has many years' experience in marketing clients' homes and businesses WITHOUT charging those huge fees and commissions.
In fact, Coast to Coast has been giving sellers the tools to sell privately for over 37 years.
They do this through print (specialist magazine) and online (Internet listings), as well as offering a fantastic Buyer Matching Service and a team of experts, including graphic designers and writers.
The next task is to value your business - to work out how much your business is worth so you can set the right price when selling.
Keep in mind that there is no one set method, and a combination of methods can be used to arrive at your desired sale value. You may also need to negotiate the method of valuation with the buyer or the financier.
How you value your business can depend heavily on the industry you're in, and the current marketplace value of similar businesses within that industry.
Industries usually come up with their own rules and formulas to value a business, so it's a good idea to conduct research to gain a good understanding of your industry before you sell your business. The Australian Bureau of Statistics is a good place to gather information.
Another method is to use the return on investment method to calculate value, using your business' net profit to work out the value. While others prefer to use the business' assets to calculate value.
Another method is to work out how much it would cost to create your business from scratch! To do this you'll need to include all relevant costs, including buying stock, buying equipment and tools, getting licenses and permits, recruiting, training and employing staff, marketing and promotion, buying or leasing premises, setting up an online presence etc.
So, you've done your research, you've chosen a professional team with which to work, you've worked out a realistic selling price. Now it's time to find the buyers for your business!
You could organise your own advertising, of course, or use word-of-mouth, but the way you advertise will depend on your business type, industry and contacts.
Check whether there are any requirements in your state or territory about what information you need to give potential buyers.
For example, if your business is in Victoria and is being sold for less than $350,000, you must provide a Vendor's Statement (or Section 52 Statement) to all potential buyers. This statement gives recent financial information about the business and should be provided by your accountant.
These are issues that an organisation such as Coast to Coast Media will be able to advise on.
Time has passed and you have a buyer! But there's still a bit to do. You’ll need to agree with the buyer on a range of things, including the sale price, the deposit amount (usually 10% of the sale price), the settlement period, handover training (if any) for the buyer and, very importantly, arrangements for existing staff.
It's important to communicate with your employees and let them know whether they'll be transferring across to the new owner or ending their employment due to the sale of the business.
In both cases, a transfer of business ends an employee’s position with you, the former employer, so you must give your employees notice of ending employment or provide payment in lieu of notice.
You may need to compromise on some things to get the best outcome. For example, if you’re keen to settle quickly, you could encourage the buyer to agree to this by offering a lower sale price.
It's a stressful time, of course, but with the right help and advice, you'll be laughing all the way to the bank!