Selling your business will be one of the most important things you'll ever do, because unlike virtually every other business decision you've made over the years, you'll only do this once. You get a single chance to put a price tag on possibly years and years of effort — and once you sign the sales documents, it's over.

You'll make life easier, both financially and personally, if you make an effort to understand the steps in selling a business:

Financials: Obtain from your accountant an abridged profit & loss (trading) statement for at least the last financial year but preferably 2 to 3 years history.

Solicitor: You should also seek advise from your solicitor as to any special restraints that could be associated to the selling of your business, the time to prepare  contracts and the cost of executing this contract.

Plant & Equipment: Prepare a list of Plant & Equipment that will be sold with the business. Items which are under lease or hire purchase should be identified as under lease or hire purchase unless you intend to pay them out at settlement of the business. The plant and equipment list, which will be provided to purchasers, should not show individual prices.

Licenses: Make sure if your business requires a license or permit to operate that they are current and transferable to the new owner. Obtain the relevant paperwork to enable the new owner to apply for the license and be aware of the time frame this process takes.

Agencies and Franchise: Obtain the relevant information and paper work to enable the transfer of these agencies  to the new owner and be aware of the time frame this will take.

Business Premises: Obtain a copy of the lease and review your lease, if you are in leased premises. Make sure you have 3 to 10 years remaining and the lease is transferable to a new owner. If not, negotiate with the landlord so as the new owner is able to secure an extension on your lease for additional time and, on what conditions the transfer will be accepted. If you own the business premises, consider having it valued now by a registered valuator or obtain a verbal curbside valuation from a Valuator or like person as part of your preparation and decision-making.

Price The Business: From the above information you, your accountant and if you are using one, your business broker can arrive at the price you can expect for your business by one of the methods explained in Value a  Business. If you  overprice your business the time it takes to sell just stretches out to the point where it is mighty shop-worn merchandise by the time it finally sells . . . if it sells. The best test for the price arrived at is "Would you or your accountant buy this business at this price".

Selling Memorandum: Prepare a Selling Memorandum which would normally include what is for sale, were (location) and for how much, photographs of the building and interior, information about the business's history, the market in which the business competes, the company's products, its operations and source of products or raw materials, operating days and hour, management, staff numbers and positions, reasons for selling, lease period and if freehold, the value of the freehold. A copy of the financials from your accountant, a list of plant & equipment and a copy of the shop lease should be in this memorandum. Before this memorandum is provided to any purchaser a confidentiality agreement should be signed.

One Sheet Summary: From the above Selling Memorandum compile a one sheet summary with your name and contact information, location of business, description of the business, price of the business, approximately the stock value, the turnover of the business, the net return of the business, operating days and hours, number of staff employed, how long the business has been operating and how long you have owned it, state your reason for selling, state if the premises are leased or freehold if leased state the length of the lease and finish the one sheet off  by  providing  a short summary of the benefits the purchase of this business will bring to the new owner. 
The reason for the one sheet summary is to allow at low cost the ability to fax or e-mail an interested person enough information to wet their appetite and ascertain if they are interested in pursuing the matter further.

Small Business Selling Memorandum: If the business is of a small to medium size then the one sheet summary with your business name and address added, photographs of the building and interior, financial statements, list of plant& equipment and a copy of the lease is all that is required as a selling memorandum.

Advertising: Advertise your business is for sale but use common sense. Fewer than 5% of the general population are prospective business buyers, so focus only on the established 'business for sale' advertising venues that this 5% is following. Don't run a massive ad campaign. It isn't required. Ads should be tested carefully and slowly. They should be 'blind ads' where the identity of the business is camouflaged. Otherwise, you run the risk of over-exposing your business. People are naive and think businesses sell as fast as houses.   Expect that it may take three months or as long as a year - or even longer - to sell.

Interested Prospect: When you get an interested prospect, supply them with the one page summary. Should they have further interest and request more information forward off the confidentiality agreement for signing before you supply your selling memorandum. It is also a good practice at this point to qualify the prospect to his ability to buy your business otherwise you have wasted a selling memorandum.  Remember that your goal is to sell; it is not to supply information to curious or unqualified people.

One of the most important aspects of your business to a buyer is the ability of the business to make money. Similarly early on in the selling process, you'll need to determine where the buyer is going to get the money to purchase your business. This is very important and will save a lot of time and money on both sides should the buyer be of the misbelieve he can obtain a business on 10% deposit or 24 months interest free as is the case with some asset purchases.

Inspection of the Business: Once the selling process is underway and you have buyers interested in your business, take some steps to increase the likelihood that your business will sell. Spruce up your business physically, throw out garbage, take out all boxes stacked in the office, straighten that crooked door, paint the office, or whatever else is necessary to make your business presentable.

Before inviting buyers to look at your business, try to look at it, as someone would see it for the first time. A messy office may indicate to some people that a business is sloppily run, and a buyer's first impression is critical because first impressions are important to selling the business. You want to do everything in your power to help a buyer feel comfortable and  to overcome the uncertainty  of buying a business.

Help yourself as well by being honest in all meetings with potential buyers. When you are meeting with a buyer, paint a realistic picture of what your business is doing. A buyer will find out the truth eventually and trying to present an overly rosy portrait is a big waste of time for everyone. Unless you come across as honest and truthful, a buyer will not believe what you say about the business.

Usual Foreplay Process: The buyer's Due Diligence seeks more information from your accountant or yourself in the way off:- 
Turnover for the last few month of trading, the value of stock that is required to run the business, the amount of debtors and creditors the business carries, the values to be apportioned to plant & equipment – Goodwill –freehold etc., sustainability of agencies/contracts the business might have and numerous other items which will dispel any concerns the buyer might have. It is a good idea at this point in time, to have the buyer's accountant contact your accountant to receive any further accountancy information, as up to this point you have been paying for your accountant's advise and preparations while it is unknown if the buyer has consulted his accountant and therefore incurred any expense. It should be noted that a purchaser would be unlikely to buy a business without consulting his accountant.

Closing the Sale: Once you've located a buyer for your business and come to an agreement as to the major terms and price, you are ready to move into the process of actually closing the deal. Some sellers and agents use an intermediate form known as a heads of agreement or letter of intent to condition a buyer to signing for a purchase. A heads of agreement or letter of intent outlines the name of the purchaser, what is being purchased, from whom the business is being purchased, the price, the settlement date and any conditions to the sale that the purchaser requires.  This form of agreement is in no-way binding and it's only use is to provide some of the information needed to draw up formal contracts. It is suggested that you don't use this non-binding form and instead have your solicitor or business broker draw up binding contracts which will include all the information for both the buyer and seller to known what they have bought and sold and when, were and how the business will change hands.

Even the best buyer prospects can change their minds overnight. After the buyer prospect makes a commitment to buy, get it in writing in contract form and get a good-sized money deposit held in your solicitor's or business broker's trust account.

Your business isn't sold until it's settled and you have the cash.

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