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What should I do before I sell my small business?

what to do before selling your business

Before you sell your business, focus on improving its financial health and adding value to it.

When you sell up, you want your business to have as much value as possible so you can get a good price, a great return on your investment and the best possible payout.

That requires stepping back from your business’ day-to-day operations to make your business more valuable and set up an effective exit strategy.

Adding value to your business

Whether the goal of your five-year plan is an acquisition by a larger corporation, or selling your share of the company to a chosen successor, it’s critically important to focus on adding value.

The more attractive the business looks in the market, the better the price you’ll achieve, or the better yield you’ll see on selling your company shares.

To drive that value, focus on these four things before you sell your business:

  • Work on the business, not in it. That way, you’re no longer a fundamental part of the day-to-day operations, and can focus on the higher-level strategic elements.
  • Invest in adding value. Keep profits in the business, reduce your personal drawings and place that money back into growth and investment.
  • Improve your financial health. Take control of your finances and build a strong balance sheet, positive cash flow and attractive profit forecasts.
  • Have a proper exit strategy. Create a plan that has reasonable targets, so you can track and measure your goals. Your strategy should be one your team can get behind.

The bottom line

If you’re looking to sell up, you need a plan. Talk to an advisor today about creating a workable exit strategy, with a clear focus on driving value and delivering a solid return on your investment.

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