If you’re planning on selling your business, the COVID-19 situation could be taking its toll on your ability to put your business up for sale. For business owners who were hoping to sell companies on favorable terms, the COVID 19 pandemic has hit the world at a most inopportune time. During times of economic downfall, it can be near impossible to find a buyer who is willing to take a business risk. During the best of times the sale of a business is stressful. But during these times, there will be more to consider than just the technical negotiation.
The good news is, despite the current circumstances, it’s possible to sell your business for a healthy profit. If you can show that your business has the following strengths, a sale is still possible;
- A strong customer base
- Reliable network of industry contacts
- Consistent profits and
- A positive brand image help attract potential buyers
Here’s what business owners should consider when preparing for a sale in the current environment.
Factor in the pandemic
As always, the terms of the sale will depend on several factors such as the timing, reason for selling, current status of operations and business structure. However, in the current climate there will be other factors to take into consideration including;
- Safety of your staff
- Customer access
- The need for delivery verses in-store purchasing
- Delivery and receipt of necessary supplies and inventory
Make sure you’re business is taking proactive steps to adapt to the Covid environment prior to negotiating a sale.
Get the business valued
But before you can begin to negotiate the terms of the sale of your business, you must take stock of your liabilities and assets so that you have a complete picture of the true value of your business.
In getting a true understanding of the value of your business you will want to have your business valued by a professional. This not only helps price your business reasonably but also lends credibility to your negotiation. Business brokers can help find prospective buyers so you can focus on other tasks.
It is also important to put yourself in the buyer’s shoes and see if the deal appears attractive. Quantify as much information as possible, including;
- Supplier interruption
- Cost of alternative suppliers
- Delayed or lost sales and margins
- The impact of layoffs and business interruption insurance claims.
All of these steps will help you and the buyer have a full understanding of the value of your business.
Inform the relevant people
Keep the people involved in your business informed. The actions you will need to take include;
- Keep all stakeholders updated on what you plan to do with the business
- Ensure that you call in overdue payments from debtors
- You may need to consider negotiating to see what they’re able to repay under these circumstances
- Keep your customers informed about delays in processing or delivery of products and services
It is imperative to remember that the sale of your business cannot go through without all of the proper documentation. This will include;
- Financial statements
- Tax returns
- Information including equipment or inventory status
- Relevant paperwork such as your current lease and
- An updated copy of the operating manual and
- Customer, supplier, vendor contacts and information on trading services
Selling a business requires a great deal preparation and a full understanding of the value of your business. This will include understanding the current state of the market economy and the ability to negotiate in good faith. Each of these areas require the experience and the expertise of various professionals including accountants and solicitors. It is highly recommended that you seek out the assistance of those who are skilled in these business and legal areas to assist you in this incredibly important transaction.