When planning to sell your business timing is key. However, ensuring your business is running well before you sell is just as important. Matt Ciallella looks at how you can prepare the best exit plan for when the time is right.
SOME AGENTS AND principals I talk to have not considered when might be the best time to sell their business. There are certainly many considerations before deciding to sell up, and most importantly is answering the question yourself before you make your journey down the sales avenue. By taking some time to plan an exit strategy, you can maximise the sale price of your business and do it for the right reasons.
Reasons for selling your business will vary. You could have had enough of the industry; it could be a declining sales market or a much more competitive property management and sales landscape.
You could have exhausted your options to have internal staff take over the business – or it could be the right time to retire. Whatever the reason, it is good business practice to have a succession plan in place so your business is ‘sellable’.
TIPS FOR SELLING
Here are my top tips to ensure your business is ready to sell.
- Start planning early. Have an idea of your timeframe and ensure this matches your personal and business goals
- Structure your business/company so others can succeed. Have a clear company vision and goal. This will attract employees and sit you head and shoulders above your competitors
- Think about who will take over the business. This could involve selling to partners, staff, family members or externally
- Identify key personnel in the business and look to how you can retain these staff through profit share, then ultimately partnerships and shares. Maintain and strive for quality managements. You can do this by ensuring excellent communication, charging appropriately for service and adopting best practice.
- Review and standardise all your employee agreements
- Create a culture of teamwork. This is a culture where all your employees have a respect for each other and your clients, and where you are not creating a culture of entitlement
- Be engaged in your business. Have a mental attitude that is success oriented. This will shine through to your staff and any future buyers
- Examine tax/capital gains tax (CGT) implications. Many small businesses may obtain a discount of 50 per cent if they hold the business more than one year. There are also rollover exemptions for deferring a CGT event when the gain is moved to another asset/business.
WHAT MAKES A SUCCESSFUL SALE?
I’ve seen many successful sales. These have been sales where vendors have made a conscious decision to leave the business and feel that ‘now’ is the right time. It doesn’t need to be an event or trigger to make this decision. It’s a decision that needs to be made on your terms – not someone else’s.
You need to be reasonable and realistic about price. If you know it’s a great business, show the prospective buyers why. Not just because of your great relationships with clients and owners, but tangible reasons. You also need to open your books and be completely transparent.
It’s never too early to start planning the sale of your business. This should be an ongoing task and part of your business planning process.
