Planning to sell your business? Get your finances in shape for a successful sale

by Sophia Auld

If you’re thinking about selling your business within the next few years, some planning can support a successful sale. Following these money management tips in the lead up can boost your chances of finding a buyer and achieving a price you’re happy with.

1. Sort your books

One of the first things a potential buyer (and their lender) will want to see is your business financial records. You may need to improve your existing systems or implement new ones. For example, modern cloud-based accounting systems like Xero and MYOB help keep accurate records and generate up-to-date reports that are all done online. You can also keep records of things like your customer base and performance against key business indicators.

2. Bolster working capital

It’s common for businesses to have capital tied up in stock or equipment. You can enhance your financial position by selling off any unused or underused equipment and assets. Tighter control over your inventory and ensuring steady stock turnover will also boost your working capital. You could also consider unlocking the equity in your business through solutions such as invoice or asset finance.

3. Protect your assets

If you have physical assets such as property, stock and equipment, check that they are in good condition and insured for an appropriate value. Motivated and experienced staff are another highly valuable asset and having them can support a successful sale, so take good care of your people and let them know how much their skills and input are appreciated. You could also consider offering them an incentive to stay on after you sell.

4. Manage debt

For many businesses, loans are an essential part of set-up and ongoing operation. However, you’ll want to get rid of any unhelpful debts. For example, make sure all your creditors are paid promptly so you don’t develop a reputation for having outstanding accounts.

Consider reviewing loans to ensure they still suit you. If you have several debts across multiple lenders, consolidating them can save money and hassle. And remember debt can be helpful, as it can allow you to invest in the success of your business.

5. Consult your finance professional

If you have a good business accountant, consultant or finance broker, they probably understand the financial needs of your business even better than you. Arrange a consultation to discuss your sale plans. They can advise you on the important steps you need to take, with advice tailored to your circumstances.

6. Reduce risk for buyers

Remember potential buyers may have a range of options on the table, including other businesses that are for sale and starting from scratch. Make it easy for them to choose yours with risk-reduction strategies such as widening your revenue and supply sources, establishing formal contracts to replace any informal deals with customers and suppliers, and ensuring there are no loose ends such as impending expiry of tenancy agreements or equipment leases.

7. Optimise cashflow

Seeing steady cashflow is a great confidence boost for a potential buyer. In addition to cashflow forecasting, do what you can now to smooth out revenue highs and lows. For example, you could implement better billing strategies to keep revenue rolling in, better trade terms with suppliers, or consider financing options that even out cashflow, such as trade or invoice finance.

We offer a range of flexible finance solutions to support cashflow and help businesses thrive. Speak to us today to explore your funding options.

Feel free to contact us for anything that relates to your business finances so we can help with your success.

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