Selling your retail business to an interested buyer is a task which always requires careful preparation. And while the information a potential buyer will want to know is generally quite generic and predictable, your chances of selling for the right price will largely depend on how well you handle the process.
So, here are some essentials which will need your attention if you want to give yourself the best chance of securing a profitable sale.
Present a well-run business
You should look over all aspects of your retail infrastructure from a buyer’s perspective. So is your shop clean, fresh and well-presented? Besides a new coat of paint, a food or clothing business, for example, may benefit from a thorough deep clean in order to meet, or even exceed, a serious buyer’s expectations. Furthermore, you should ensure that any business equipment which is outdated or showing signs of wear and tear is replaced in good time.
Keen purchasers, and their due diligence teams, will be looking beyond such retail visuals, and will need to be satisfied the business is currently in good order. For you, this means taking care to present core financial information in the sector-approved formats.
This would normally include elements such as: clear and up to date financial statements (including profit and loss) which track your business performance for a minimum of three years; a comprehensive schedule of business liabilities and debts; financial projections addressing matters such as cash flow, sales revenues and profits. This information should show how your business is funded, and to present a thorough overview you should also include details of any staff contracts.
Provide a business valuation
Serious buyers will want to understand whether your business is a value-for-money option, so you should provide a professional business valuation, which will be key evidence of your company’s worth. This document should be prepared by a valuer who knows your sector and must follow the methods your industry uses to value your business assets and assess the overall value of your company.
Demonstrate the potential of your retail business
Not only must you show your business is in good order, you must also be able to detail why it will be an attractive prospect for any buyer. So, what are your USPs? Perhaps you are leaders in the field who have well-qualified staff with many years’ experience, and/or workers who possess unique skills. Or maybe your business sells unique or exclusive niche products not available elsewhere in your region. Other possibilities could include access to unique technologies, unrivalled standards of customer care, or a reputation for keen, value-for-money pricing backed by a guarantee you won’t be undercut.
Whatever your own sector-specific USPs, they should be highlighted and presented as strongly as possible if you are looking to get a top price for your business. You must be able to positively differentiate your business from your rivals. After all, if others do the job just as well as you – or better – why would any buyer be anxious to pay top dollar?
Your buyer-friendly market analysis should show how your business is well-placed to exploit current trends. And you should also indicate how you would plan to maintain and improve your current market position, and what potential there might be for future expansion.
Think carefully about your advertising and selling options
Some sellers may be confident that they can find a buyer within their own networks, but most will need some help with promotion. The primary options are using a business broker or going it alone and using an advertising platform. Those who lack confidence may always prefer a broker, but in many instances, it depends upon your own confidence and experience and the conventions which apply to your sector.
An experienced business broker who is thoroughly familiar with your industry can be a valuable asset. You will need to choose someone who has good contacts with plenty of buyers, will properly represent your interests, and is up front about the brokerage and other charges you will be expected to pay. Most importantly, it must be someone who is honest and someone you can get along with.
Online advertising platforms will be a cheaper option. But once again you must be clear about precisely what services they will offer, what costs and commissions are involved, and understand how your business will be marketed, and for how long.
By Matthew Hernon is an Account Manager at Dynamis looking after Business Transfer Agents and Franchises across BusinessesForSale.com and FranchiseSales.com.