Listed in: Selling & succession

How to get your business ready to sell

Selling a business takes careful planning and strategy. We’re breaking down some steps you can take early on which can help you navigate the selling process smoothly.

5 minute read

When it comes to selling a business, it’s important to plan and be prepared for any outcome. Following some simple but effective steps can help you be prepared for the journey ahead of you.

Ask yourself why you want to sell up 

Prepare a clear and honest answer. The first question most potential buyers will ask is why you’re looking to sell – particularly if you’ve been vocal about what a great and profitable business it is. The answer to this question will set the tone for every conversation about the sale, so take some time to consider what you’ll say. Just remember honesty is always the best policy, especially if you want to maintain your integrity in the market.

Ideally, your mindset should be of acceptance that you’ve given the best to your business, but that it’s time for it to grow under the guidance of new ownership.

Don’t rush setting the groundwork  

The early stages of getting your business prepared for selling are some of the most crucial, especially if you want to look back without regrets. Determining your objectives is a great place to start. Consider key goals like:

• aiming to sell by an approximate date
• setting a specific price target
• having the opportunity to continue some form of involvement in the business.

Come up with a plan B

There’s always a chance a buyer might fail to eventuate. If exiting your business is the ultimate goal, consider a back-up plan – like being bought out by management, or passing ownership over to a family member.

Think about restructuring

Take a step back and look at your business objectively and explore whether it’s ideally structured for a sale. For example, if your business owns its location, could this make it unaffordable for potential buyers? If that’s the case, you could think about restructuring into two separate businesses – one that owns the building, and one that owns the trading aspect.

By taking this approach you could sell the trading part of the business and hold onto the part that owns the building, effectively creating rental revenue that could fund your next business development – or even your retirement. 

Seek out sound advice

As well as talking to your accountant, get in touch with experts like your lawyer, a financial advisor, or a commercial sales broker. Good advisors will help free up your time, so you can focus on running your business – and they can also offer input on:

• how to boost your sales revenue and pre-sale profit margin
• ways to build credibility with potential buyers
• getting an accurate business valuation
• how to sell privately (including how to contact buyers without revealing that you’re the business owner)
• growing your list of potential buyers.

Minimise potential risks 

It’s important that buyers view your business as a low-risk opportunity. Consider ways you could make their lives easier.

• Formalise any current informal deals with customers and/or suppliers.
• Make sure suppliers will continue your business line of credit in the event of a sale.
• Come up with job perks and fringe benefits designed to improve employee retention.
• Broaden your revenue sources and/or supply chains, so you’re not dependent on a few large customers or one big supplier.
• Tie up all loose ends. For example, if your tenancy agreement is expiring shortly, get your landlord’s agreement to a new arrangement in writing.
• Make the purchase easier on a buyer by offering competitive financing rates, or the ability to pay in instalments.  

Deciding to sell your business is never easy, and neither is the selling process itself. It takes solid preparation, expert help, and careful consideration. When you get to the stage of putting your business on the market, you’ll feel optimistic about the outcome and relieved that you took extra care early on in the process.

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This material is for general information purposes only and does not constitute, and is not intended as, personalised financial advice or as a replacement for legal advice. BNZ strongly recommends you seek advice specific to your personal financial or legal situation from a qualified adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.