Last week I was having a chat with Ally Khan Satchu a re-known economist in the country and one of the idea that crossed my mind was the issue of Startups in Kenya and also why young entrepreneurs will start off a business and when its doing well they decide to sell them.I would not dream of selling something that I have sweated for from the scratch.
But Ally Khan argues that selling your business is a big step and one many business owners consider from time to time. Cashing in on the labour of your hard work and getting a cash pay-out can allow you to retire, start a new business or just to make money.He advises that if one has to sell out their business then they must consider the following:
Begin planning as soon as possible
You can never start the planning process for selling your business too early. Not only do you need to develop a solid understanding of how the process of transferring your business to another party works, but you also need to prepare yourself for any emotional issues that may arise when selling your business. This can help ensure that you are ready to take action and that you can keep your wits about you when it comes time to make the sale.
Have a plan B ready
Often times, business owners back out of deals simply because they don’t know what they will do next. There can be a lot of fear of the unknown associated with selling a business. Having a solid plan in place helps eliminate this fear, hence improving the chances of going through with the sale.
Think about what you would find most fulfilling as you move on with your life. For some, it may be starting a different business. For others, it may be something like devoting themselves to doing charity work or teaching others.By choosing a new adventure that you are passionate about, you will be far more likely to go through with the sale.
Know the worth of your business
Since you have invested so much time and energy into building your business, it is only natural to assign a lot of value to it. Unfortunately, however, that value may be higher than the market is willing to bear. You have to be realistic about how much your company is truly worth. Do your research and have a figure in mind that you can quote to interested buyers. Be sure that this price is not only fair to you but that it also accurately represents the true value of the business.
Also, be prepared to answer questions from buyers with as much detail as possible. This can help eliminate any fear that they may have about going through with the sale.
Don’t get caught off guard
The last thing you want is to be surprised at the last minute by an unexpected issue. Always be open and honest with potential buyers about any negative aspects of your business. For instance, if you are having trouble with a customer, be sure to mention it to the buyer so that they are aware of the issue.Even if you are confident that the relationship can be mended, it is important to make sure that the buyer is aware of the rift.
Being upfront about this during the pre-sale period can help avoid problems when it comes time for the buyer to do their due diligence. If a problem is discovered by the buyer during this period that you failed to disclose, it could result in the sale falling through at the last minute.
Go through due diligence politely and slowly
It can be easy to take due diligence personally since it can feel like a personal attack. You shouldn’t view it this way, however. Instead, try to see it for what it is; a normal part of doing business. It is normal and expected for buyers to be filled with questions about your business, as well as to want verification of what you tell them. Although this can sometimes feel like a personal attack, it is necessary for the sale to go through. Always prepare yourself ahead of time for any questions that you may find particularly challenging to answer. That way you will be less likely to respond emotionally when the buyer brings them up.
Having an escrow agent in place to take care of the financial transactions
If you’re selling your business, maybe you should consider having a financial/bank agent. The agent is an officer who accepts the money into an escrow account on behalf of previous owner from the buyer and will then disburse the funds at times stated in the contract. It’s a safer way to sell and buy a business.
Even if you are not currently planning to sell your business, it pays to prepare yourself in case something happens that requires a quick sale.