This document provides information on preparing a business to be sold. It discusses the importance of having an exit strategy and making a business attractive to potential buyers. Key points include having clean financials, systems that make the business independent of the owner, growing sales through marketing, and ensuring the business is providing something in demand. The overall message is that businesses which are "ready for sale" are more valuable and owners should start the preparation process now.

1. Introduction
To
Successfully Preparing A
Business ‘Ready For Sale’
John Denton – Denton & Associates
The DNA of business

2. We Will Cover …..
 Why prepare a business “ready for sale”?
 Why business owners sell
 Begin with the end in mind – 7 P’s
 Know what your business is worth
 Increasing The Value of A Business
 Making a business more saleable and attractive to a buyer

3. Why should you get your business in to
a “ready for sale” state?
BECAUSE
A business which is “ready for sale” is
well worth keeping!

4. FACT: A recent survey of SME’s showed that 40% of
business owners will be relying upon the proceeds from
the sale of their business to fund their retirement.
FACT: A whopping 85% of those same business owners
do not have an exit strategy or a plan for selling their
business.
FACT: An incredible 32% of business owners said they
intend to close their business down, and have no
intention of trying to realise value from what they have
built!
IT DOESN’T NEED TO BE LIKE THIS!

5. Why do Owners Sell? - Proactive
 Common reasons include:
Approaching retirement
Buy another business
Seeking a new challenge
Change in personal circumstances
Loss of motivation and ideas
Need to reduce stress
TO CA$H OUT AND ENJOY THE FRUITS OF ALL THEIR
LABOUR
Pursue some other goal
Franchise

6. Why do Owners Sell? - Reactive
 Common reasons include:
Business in decline
Key person leaves
Loss of a contract or supplier
Ill health
Change in personal circumstances, move, debt etc
Loss of motivation and ideas
Unexpected offer comes along
Others ???

7. Plan And Prepare
If you fail to plan then you plan to fail
Begin with the end in mind. E.G. Legal Structure,
partners, partnerships etc.
Have an exit plan
Know your time frame for selling or being “Ready for
sale”
Know how much you want to sell for
Things take time – start planning and preparing NOW!

8. Know What Your Business Is Worth?
It’s not about TURNOVER
It’s all about leftover
Tax MINIMISATION
Profit MAXIMISATION
Financial Factors (Adjusted Maintainable Net Profit)
Non Financial Factors (Determine ROI Factor)
(Time been operating, location, lease, reputation,
staff, systems, ‘family members’ etc. etc.

9. How is the Market Price Determined? (Majority
of businesses < $5 million)
 Calculate maintainable adjusted net profit, before tax, for a single owner-
operator
 Profit per the financial accounts
 Plus add-backs
 Less adjustments
 Review three years results
 Apply an ROI % (Consider non-financial factors)
 Other Approaches:
 Market Value: Apply a multiple of weekly or annual turnover (prior to
1980’s) Still used for ‘professional practices’
 Asset Value – Going Concern: Add asset value to a goodwill figure (Over
values businesses with high asset values)

10. Well Kept Clean Financials
Clean – No Personal Items
Show owners wages and super separately
Record everything – NO CASHIES!
Well structured chart of accounts
Know where your profit comes from
KPI’s – An instrument panel for the business
Keep them up to date!

11. Owner Independent - Systems
Owner centric businesses do not sell
S – Y – S – T – E – M – S
Make it easy for a new owner to take over
It’s easier to train staff and get them up and running
Free up the owner to work on the business
Easier to duplicate (Franchise) the business
OWNER CAN HAVE HOLIDAYS & LIFESTYLE

12. Grow The Business – Sales & Mktg
Lead generation systems
Client retention systems
Increase the value of initial purchase
Increase the life time value of a client
Reduce reliance on sales staff
Build a databse of clients and prospects
Make effective use of ‘free’ social media marketing
techniques and tools
Direct response marketing

13. What Are People Buying – In demand?
 Import / Wholesale / Distribution
 Service businesses (5 days), e.g. training, marketing, etc.
 Caravan Parks
 Manufacturing
 Coffee Shops (Large)
 Hotels & Taverns
 Equipment Hire
 Labour Hire
SIMPLE BUSINESSES MAKE MONEY, COMPLEX ONES
DON”T!

14. Thank You!
This and much more is covered in lots of detail in my half
day workshop “Strategies For Selling and Buying
Businesses”.
Next one is Thursday September 20th, Wanneroo, from
8.00am to 12.30 pm – Register at my web site.
 Website www.johndenton.com.au
 Facebook Page www.facebook.com/DentonAndAssociates
 Blog www.johndenton.info
 Twitter follow me @bizreadyforsale