What to expect when you're expecting (...to sell your business)
For most of us, selling a business is not a process that we go through often. Therefore it is often an overwhelmingly new, dizzying and emotional process for those who come unprepared.
Whilst I specialise in selling cafes, restaurants and other hospitality businesses, these points will still apply to most business owners.
Here are my tips on how to manage your expectations when you are expecting to sell your business.
1. Initial thought
Some business owners may have thoughts of selling their cafe, restaurant or bar before they have even found a location for their business, but for most, the thought to sell often comes suddenly and without premeditation.
Most business owners are faced with a 'fork in the road' moment, it may be that they have had an opportunity come up elsewhere they wish to pursue, or they have reached the end of their tether (albeit financially, emotionally or physically) or they may have decided that they just need a change.
What is my cafe or restaurant worth? If you are having thoughts about selling, it is now time to value your business. The easiest way to start is to find similar businesses for sale on advertising websites such as Seek. Other listings will act as a rough guide, but the best practice is to speak to a business broker who can take in all specific factors that concern your business and the current market to give you a more definitive price guide.
Once you have valued the business it is then time to decide whether or not to list the business for sale. If you are happy with valuation, you may be inclined to sell. If however, you are unhappy with the price guide, you may wish to ask your Broker or other advisors about what areas of the business need improving to increase it's value. A lot of the time these areas are a combination of financials, lease terms and competition in the market.
So you have decided to sell? The next step is to gather all of the key points of information, such as leases, council documents, licences, financials, reports and agreements. The planning is a necessary evil that often involves rummaging through e-mails looking for documents. Ideally this planning and organising of documents would be completed from day 1 in preparation for a future sale and often I see that this is something a more experienced operator will do.
If you have decided that now is not the time to sell, you can regroup and seek to improve the business.
It is uncommon for a business to sell overnight. A business, unlike a home to live in, is not something that everybody is looking for. As the pool of prospective buyers is smaller, most business owners should expect to sell in a number of months rather than weeks. It is for this reason that it is imperative that as an owner, you remain focused on your business. The sales campaign is not the time to "switch off" or "check out" - the business must be looking its best, operating efficiently and performing well during the sales campaign.
The sales process will include a number questions, requests for documents, e-mails, phone calls and interviews. Whilst this may sound overwhelming, if your business has been correctly prepared for sale, your broker should be able to field most of the enquiries meaning that the selling process should not be a noticeable burden on you.
When selling a business, most of us want the best result. We want the right buyer, the right conditions and the highest price. If you are organised, are in no rush to sell and willing to work on your business you are more likely to achieve the best result. If however, you have scrappy records, are unwilling to make suggested improvements and want a fast sale you may have to lower your expectations.
At the end of the day, much like in Real Estate, it is the Market and not the Business Owner that decides what a business is worth.
Just don't forget to enjoy the process and look back at the achievements you have made along the way!