When planning to sell your business, timing is key – however, ensuring your business is running well is just as important.
Some agents and principals I talk to haven't considered when is the best time to sell their business. There are certainly many points to consider before doing so, and the most important is answering the question yourself and embracing going down the sales avenue. By taking some time to plan an exit strategy, you can ensure you 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 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 the following points match 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 place 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, your clients and that 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 cut 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 recognise 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 others.
You need to be reasonable and realistic of 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.