Tips for Selling a Business : Employees and Infrastructure





As a California Business Broker, I hear frequently, "do you have any tips for selling a business?" Here I will share with you some great advice that may help you position your business so that it will be appealing to a buyer. On this page I will focus on creating systems that will help you business to be marketable.

First, truthfully answer these questions:

If you were to not show up for work for several weeks, what would happen?

Would your business fall apart with without you?

Can your staff run things without you?

Do your biggest customers buy from your business because of a relationship with you?

Are you the business?

The reality is that virtually every business owner will say yes to one of the questions above. For small and medium sized businesses, many times, the business is very dependent on the owner. With that being said, businesses that develop and implement procedures and training practices and have the infrastructure in place will be much more appealing to buyers. Buyer want to see a business that will function and succeed, even after the owner is removed from the equation. Businesses that are overly dependent on the owner, because of a certain skill set, or relationships, pose a higher risk for a buyer. Higher risk = lower price or no sale.

This means that some businesses need to grow in order to be sold. This is especially true for professional practices, professional services or small service businesses. For these businesses the potential buyer faces a risk that the customers may leave with the owner.

For larger businesses this may mean that the owner(s) need to institute some procedures to make the business operate more independently. Coincidentally, this may be a good idea even if you are not thinking about selling.



Here are some Tips for Selling a Business :

Tips for Selling a Business #1. TRAINING- A business that has well trained employees is one where the employees can function more independently. If your employees come to you for guidance or direction throughout the day then some training may be needed. A new owner will be learning themselves and it may be overwhelming to have to lead many employees at the same time. If you are in a very specialized industry you will need to train key employees to perform the tasks that only you do.

Tips for Selling a Business #2. CONSIDER HIRING - If feasible, it may be advisable to hire a manger or supervisor for your business. This presents a fully functioning operation that allows a new owner to step right in.

Tips for Selling a Business #3. START DELEGATING- Start assigning tasks that "only" you handle to key employees. If you currently handle certain key accounts, consider delegating that to an employee or a group of employees. Over time your employees develop relationships with the customers and therefore the relationships transfer with the business.

Tips for Selling a Business #4. POLICIES- Develop or re institute clear policies and procedures. A new owner may want to change them but the want to see them when the buy the business. The goal is to present your business as a well organized efficient unit - not a fly by the seat of the pants operation. Clear, well defined policies will help your employees be more independent as well.

Tips for Selling a Business #5. VENDORS - Are you getting a special deal from a vendor? Get it in writing. Define the agreement. Make sure that the agreement is between their company and your company. If the deal goes away with you then it will impact earnings and the buyer may want to change his or her offer.

And the Final Tip: Put it in writing: Training and policies do not do a buyer any good if they are in your head. Create employee handbooks or training manuals with your policies in writing.




By taking some time and dealing with some housekeeping issues your business will present much better to the potential buyer. If these items are addressed it will give the buyer confidence. Confident buyers move forward and deals get done.

Remember that earnings are still the most important factor, but having a well -oiled machine, that can run after you are gone, will help you business sell for a premium.

If you are a business owner in the Southern California area and are considering selling your business I'd urge you to contact me. If you do we can set up a confidential complimentary consultation where I can review your business and discuss the process of selling your business in greater detail.



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