Many business owners will reach a point where they have put in a lot of hard work into their business and have established their organisation within a given sector. At this point, owners may find themselves looking to move on to their next challenge – which will mean either implementing a succession plan or selling the business.
For those who choose the latter option, there are a number of different steps that will need to be taken before you can hand over the keys to a new owner. Here are three of the most important steps:
1) Valuate your business
The first step to selling your business is calculating the value of your entire operations. There are a number of different factors that will need to be included in this price, including:
- Your stock and any other regular purchases that are scheduled;
- Current and projected revenue and profit figures;
- Any property, equipment or other permanent aspects of the business – this includes the remaining term of your current lease (if your business premises is leased);
- The goodwill your business has – this will be a general figure that represents the reputation and brand awareness your company has.
Once these different areas have been calculated, business owners will have a clear idea of how much their business is worth and what a fair asking price would be when they move to sell it.
2) Prepare a sale contract
Whenever a business is sold in Australia, there needs to be a sales contract which will lay out the legal rights and obligations that both parties have during the sale process. This will record the assets and liabilities associated with the business and how they are treated in the sale, along with any further information or conditions, such as: a restraint on the owners preventing them from competing with the new buyers, a requirement that the landlord agree to assign the lease and GST treatment.
Because of the number of legal requirements that accompany this process, it is advisable to have a lawyer draft this document for you.
3) Any final issues
Once the ownership of a business has been transferred, there are still a number of other areas which an owner will need to consider. These include any tax and GST from the sale process, any training you are obliged to provide to the new owner, the transfer of any licences or leasing agreements, business names and cancelling your Australian Business Number.