What to do if you want to get out of your current business
One thing not to do is let your existing business run down, this is because it will then be worth less when you come to sell it. First, think about why you want to sell.
Sometimes people decide to sell because there is a downturn in sales and profit. If that’s the case you might want to delay selling until you’ve looked at whether your business can be revived.
Contact your local business advisory service for free advice. You could make use of organisations such as Economic Development Agencies (for example, the Canterbury Development Corporation, Venture Taranaki and Venture Southland). Economic Development Agencies have an interest in helping you survive, or at least exit with the least amount of damage.
Find your local Economic Development Agency
[This link goes to the Economic Development Association of New Zealand (EDANZ) website.]
Contact your local biz Centre
They provide business information and referrals.
If you still want out then commit yourself to selling. Don’t start looking for another business yet. Sell yours first.
Concentrate on cleaning the business up, painting your premises, and increasing sales via a special effort on your part. Talk to your accountant about what you can do to improve the saleability of your business from an accounting and tax point of view.
Once you have decided to sell your business, there are a number of issues to deal with.
First, you must decide whether to sell through an agent (generally a business broker, lawyer or accountant). Business brokers will charge you a commission (usually 3 to 4 percent) on the sale price, though the commission often depends on the size of the business. The purchaser actually pays the full price and you receive 3 to 4 percent less, so in reality you pay the commission.
Presenting your business for sale
Before putting your business up for sale gather material to present to any prospective buyer. This could include:
* Obtaining from an accountant the latest figures on your business (profit and loss account, balance sheet). You don’t have to wait to the year end - just ask your accountant to prepare a set of accounts up to the month just gone.
* Explaining on paper why sales were at the indicated level, your predictions on any future trends and expected net profit.
* Making up a list of all the suppliers you buy products from, with addresses, phone numbers and any relevant contact names.
* Setting out how you price your products and why.
* Giving the new buyer an idea of what type of customers you have, what they buy, how much they spend and where they come from.
* Developing an operating manual for your business.
You should also:
* Include a copy of the lease if one exists.
* Explain any advertising you have carried out, with an indication of its success.
* Provide a list of assets and equipment you are selling, along with a registered valuer’s report confirming your asking price.
Compile all of this information, with anything else that is relevant, into a neatly printed and bound document.
You’re now ready to put your business up for sale.
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