How Can You Get Ready to Sell Your Business?

When you decide it’s time to sell your business, make a handsome profit, and move on, you need to make sure  it’s ready to attract a potential buyer. This week RTA Business lets you know how you can get your business in perfect shape when you decide it’s time to sell up.

RTA Business is a service that specifically exists to broker the right deal for you when you wish to make some money and sell your business on. That means we know the whole process inside and out, and furthermore, we know what you need to do to make sure it’s ready to sell.

Making money off the sale of your business means you have to attract a buyer, and you won’t attract a buyer if all the loose ends aren’t tied up – buyers aren’t exactly known for their desire to deal with what you’ve left behind. That’s why you’ve got to make sure your company is ready for them to take over at their convenience.

The Business Sales Preparation List

So how can you do this, what are the final steps that you need to take? At RTA Business we’ve witnessed countless business owners from numerous sectors position their company’s ready for sale and we found that doing so generally includes:

• Settling Legal Matters: No buyer will be interested in a business with legal baggage attached, because it could negatively impact their own firm going forward. Settle all legal matter before you even think of selling.
• Driving up Profit: Profit margins mean everything to potential buyers. They’re the most obvious tool you have at your disposal to show how a buyer can make money from your business. Drive your profits to their maximum potential before you sell.
• Settling Debt: This is similar to settling legal matters- no buyer is going to want to inherit your debt. If you can, settle or at least mitigate debt obligations before you actually put your business on the market.
• Protecting the positions of key employees: A buyer will want to know that the people who made your business a success will continue to do so under their leadership, which is why you need to make sure those employees commit long term before you sell.
• Cutting Costs: A long expenses sheet may persuade a buyer that your business isn’t worth the effort, so it’s always a good idea to trim costs before you put your business up for sale.

At RTA Business Consultants we would always suggest that you make sure your company is in the best possible shape before you put it up for sale – that way you have all the ammo you need to attract a buyer and make a profit once they sign on the dotted line.

RTA Business Lists the Top Six Business Practises

Before you even think of putting your business up for sale, you’ve first got to make sure that someone wants to buy it. That’s why it’s important to develop and follow good business practises and this week RTA Business thought we’d lend a helping hand by listing our top six!

Buyers are ultimately looking for a business that will make them more money, which means you’ve got to develop a culture that not only makes money, but that is centred towards sustaining that goal in the long term. That’s why these six business practises are vital to your eventual sale.

1)      Good People: Your business is only as good as the people who work for it. That’s why you need to make sure that you surround yourself with the most skilled people for the job. Don’t hire lesser qualified individuals to save money, it’ll do more harm than good in the long term.

2)      Protect Your Brand: You are your name; people will factor your reputation in your chosen industry into their decision not only to do business with you, but in whether your business will benefit them. Always strive to maintain your reputation as a trusted company.

3)      Chase Down Payment: This is crucial to your profit margins, always make sure you chase down late payments. Letting this issue slide not only leaves you with less money in the bank, but persuades those you trade with that you are a soft touch, which if it reached a buyers ears, could persuade them that your firm isn’t worth the hassle

4)      Do Your Market Research: This is a vital business principle; know your audience. You’re never going to be able to get them to part with their cash if you don’t know how to appeal to them. Buyers will also most likely ask you about your target audience and if they don’t have the information, it may persuade them that there isn’t a stable customer base to take advantage of.

5)      Diversify Your Service: Don’t just stick to the goods and services that have already made you a success, try out new things. Not only will this potentially lift your bottom line, it will show potential buyers the areas they can expand into and make more money.

Be Honest: It’s a basic human truth that deceit will catch up with you in the end, and it’s the same in business. Without honesty, you cannot sustain success in the long term and prove your business is viable to a potential buyer.

The Science of Corporate Expansion

Sometimes in order to sell your business you must first expand it, which means risking resources that may be lost should the venture not succeed. This week RTA Business looks at this idea through the prism of Primark’s announced move to open stores in the states.

Expansion is somewhat of a dangerous game. Naturally, when a buyer wants to expand, it is likely to benefit you, as one way they could expand is to take on your company. However, if you need to expand to show your profitability, you have to risk your own capital and it’s a calculated risk at best.

A Calculated Risk

That is exactly the gamble that discount British clothes chain Primark is taking at the moment. American markets are notoriously hard for British businesses to break into. Even monolith Tesco couldn’t do it. Yet Primark think they can succeed where even Tesco failed. However more upmarket clothes brand Topshop did succeed.

The famed discount fashion chain, which is practically a household name this side of the Atlantic, is planning to start off by opening a chain of stores in the North-East (New England, New York, Pennsylvania) area of the country. They are banking on the success that name recognition has meant for their bottom line to bankroll that expansion.

Primark have been the perfect example of a business that knows how to attract their customers and in doing so, generate growing volumes of business. Not only are they big over here, but they have seen great success in Europe, opening 250 premises over the past ten years on the continent. This expansion is largely down to detailed market research and leaders at the brand have suggested that it is market research that has fostered this move.

They certainly have the profit margins to back it up. Associated British Food, the clothing chains parent group, announced a 4% pre-tax profit rise in the 24 weeks before 1^st March. This figure stands at £468 million.

RTA Business Expansion Formula

So at RTA Business, we see that although we don’t know whether Primark will succeed, they are positioned to at least attempt a large expansion. What should Primark’s situation teach you about the right time to expand?

• Do Your Market Research
• Try expanding in stages to take advantage of favourable markets
• Have high profit margins; how else are you going to bank roll it?
• Establish a recognisable, trusted brand name to at least carry some weight with your new customer base.
• Learn from the mistakes and successes of those who came before you.

Expansion is a delicate balancing act, but sometimes in order to attract a buyer to your business, you need to prove more profitable to them, which means expanding. Make sure you follow the example of Primark if, and when, you do.

Business Expansion: A Balancing Act

At RTA Business, we know that one of the best ways to attract a potential buyer to your business is to strengthen the profitability of said business. This often requires expansion. However, recent news from online fashion retailer Asos reminds us that expansion is a balancing act.

The online fashion service has announced and undertaken a whole host of expansion plans that are designed to increase the profitability of the Asos brand. This is a common business principle; in order to generate new revenue you have to find new avenues where that revenue is available, hence expansion.

However at the time of writing, shares at Asos were down 8%. The fashion retailer had already announced that expansion plans were likely to affect profitability in the short term, and this announcement drove down share prices.

Specifically, Asos announced that it has plans to spend £68 million on expansion this year alone; this was a revision from the £55 million figure it had previously quoted. These funds are going to increase warehouse space and overhaul IT systems that are integral to the Asos business model.

Furthermore, the brand illustrated how the expansion plans would increase profitability in the long term, stating that these measures would generate an extra £2.5 billion in sales capacity per year. Again, this is a revised figure; the amount quoted previously stood at £1.5 billion. However due to expansion costs, they released sales figures that were lower than forecasts.

Founder and chief executive Nick Robertson was quoted by major news sources on what these changes will mean for Asos in the long term. Robertson said that: “It has been an exceptionally busy period of activity at Asos, with continued growth and accelerated investment.”

Conlumio retail analyst David Alexander expanded on the point, highlighting what the long term effect of expansion plans at Asos would mean. Alexander said that: “A minor loss of momentum should not detract from an upward trajectory which has seen the fashion retail powerhouse post stratospheric numbers in recent times.”

At RTA Business, this reminds us that expansion is a balancing act. It’s always wise to expand to attract new buyers, but it could affect your profitability. This is why timing is everything in business expansion. You need to choose the right time, so that in the long term the expansion will benefit your bottom line.