Is your surf retail or surf wholesale business sale-ready?
By Clint Fraser
All of us in business should have a business exit plan/strategy from the very beginning of the business life cycle – begin with the end in mind! Let’s face it, we need to plan for those winter Indo escapes and northern hemisphere snow seasons, right?
It is critical to ensure that your business is sale-ready. Having your business sale-ready will increase your chances of achieving an outcome that meets your objectives and ensures that you achieve a good return on your investment. Remember the sale of your business may be “planned” but it could also be “unplanned”, for example, due to health or another random event.
With more and more businesses coming onto the market, being sale-ready is more important than ever. So what can you do to make sure your business is sale-ready? Businesses that are well managed and profitable will always be sought after.
To ensure that your business is ‘sale ready’, check that the following is in order:
- Business documentation is in order
- Processes are clearly documented
- Systems are capable of providing quality information
- Technology and software are current and in good working order
- Inventory is well managed with minimal old stock
- Staff employment agreements are current
- Property leasing arrangements are current and provide options for the future
- Financial performance is strong and has an improving trend
- Budget to actual performance is documented and actively managed
- Arrangements with business partners, service providers etc. are documented and up to date
- Your business plan is well documented and being implemented
One of the key considerations when assessing the readiness of your business for sale is the business’ level of principal reliance. If your business is principal reliant it may be difficult to find someone willing to take over your business. This will probably be less critical for surf retail, but more applicable to a surf wholesale or manufacturing operation.
In order to rectify this situation it is important to start planning for the sale of your business years in advance. You may decide that an internal transition of ownership is your best exit option. Do you have a future successor in your business? A key staff member is often the best person to consider as a possible successor as you can start transitioning management and other responsibilities a lot earlier than if you were selling to an external successor.
STEPS IN PLANNING FOR SALE
The following is a guide as to what you need to do before putting your business on the market or approaching potential successors.
- Prepare a Selling Memorandum – includes unique selling points
- Prepare a Register for Sale – documentation to be given to potential buyers including confidentiality agreement
- Obtain a business valuation
- Discuss your proposed sale with your professional advisers
- Obtain tax advice prior to sale
- Determine the purchase price
So even if you are not intending to sell your business tomorrow, you should at the very least begin the planning today.
If you have any questions or queries regarding the preparation of your business for sale please do not hesitate to contact Clint Fraser at Davidsons Accountants & Business Advisors – clintonf@davidsons.com.au.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Bstar or Davidsons Accountants & Business Advisors accepts no responsibility for any loss suffered as a result of any party using or relying on this article.
