Selling your business is a huge decision to make. If you are going to sell your business you need to know why you want to sell them.
The common reasons to sell your business are based on issues of bad cash flow, tired of running the business, short on cash or you are exhausted.
The better reason to sell your business is because you want to grow and are happy to start a new venture. You need to make sure you want to sell your business for the right reasons and that a plan is in place once you do sell it.
based on issues of bad cash flow, tired of running the business, short on cash or you are exhausted. The better reason to sell your business is because you want to grow and improve and are happy to start a new venture. You need to make sure you want to sell your business for the right reasons and that a plan is in place once you do sell it.
A main issue you may have is that your business is not READY to sell. From Richard’s experience in the industry he has sold two fitness and wellness businesses successfully. From this he has devised 8 steps that will teach you how to have your business ready for sale!
1. Profit and loss statement
If you want to sell your business successfully you need to make sure you have your profit and loss statement prepared. It is good to have 3 years worth of P&L statements. If you have only had your business for 2 years then you’ll just have 2 P&L’s. The more P&L’s you have the better because it extends the sales life cycle of your business. In these P&L’s make sure you include:
Your salary: If you haven’t been paying yourself a salary add up all the bits and pieces you withdraw so that the new owner can see how much they can earn.
Your profit – This is the most important thing in the statement. You want to show a clear profit.
2. Solid systems
If you’re planning on selling your business you need to create solid systems for your business. This involves documenting what you do everyday, how your business works, your training philosophy, the staff you need and more. If you don’t know this you should make sure that you write the systems down now. Have someone else to write it down by following you and documenting it. This will give the new owner a guide of how you run the business and what it takes to do so.
3. Where your leads and marketing come from
The new owner will want to know if they are going to get new leads in. You can show them how you generate your leads with a spreadsheet that includes what you spend on marketing through google ads, social media and other channels. You should include where are your leads coming from, how much they cost you and how much time you spend generating them.
4. Solo trainers be aware
If you are a solo trainer and don’t require staff then you yourself are the business. This is a problem because you need staff, even if you are a personal trainer you could get a part time staff member. It will be hard to sell your business if you are a solo trainer. If you have staff you should write down the job roles and job descriptions and how much your staff cost. This will provide clarity for the new owner.
5. Unique Selling Point
If you don’t have P&L’s and good staff you need to ask yourself why do people train with you? What do you have to offer? What do you own that no one else does? It could be the way you train, your my method, the partners you have, the location, or even the intellectual property that you exclusively distribute. Your USP is essential in marketing your business for sale, just like you market it to get new leads.
6. Equipment and assets
If you own a gym you will have a lot of assets, equipment is important to list when you sell your business. Remember equipment is a depreciating asset. However listing your assets is one way to increase the value of your business.
7. Who is going to buy your business?
Who will buy your business? Selling your business is like marketing your business, you need to ask yourself who do you want to sell your business too.
You’re going to sell your business to one of the following:
- A great staff member –This is one of the best ways to sell because the staff member already knows the business. They have watched it grow and will know what it takes to take over successfully.
- Your competition – This is why it is important to stay close with the competition and industry peers. As you can approach them and ask them if they want to acquire your business. It is important to attend industry events and know who the people around you are.
- Somebody who is looking for an opportunity – An investor that doesn’t know who you are at all.
Your business has to be attractive to those types of people hence you need to make sure that your collateral is aimed at these people. The first 6 steps should be targeted to these potential buyers.
8. Advertise your business
You want to advertise that you are selling your business right way. This involves advertising it on industry publications and approaching a broker that has experience in selling health and fitness business. Put your own ads out there on business for sale sites, but keep it confidential. Confidentiality means advertising as a private business without sharing the business name because this is not good for business if your clients find out.
How much can you sell it for?
If you have completed the first 6 steps and you target the right buyer you should maximise your sale price. A lot of the time you can sell your business for 3x profit or owners earnings.
When you sell your business you need to ask:
- Why are you wanting to sell your business? If it is a response that can fix your business up then perhaps it is not necessary to sell your business, but instead to improve it.
- When you sell your business what are you going to do – take time off? Would you enjoy this? What happens when you come back from holidays? You may be back to square one. In today’s marketplace it is hard work, so be aware that when you sell your business you may have to keep working hard.
You will generally spend 6 months fixing up your business getting it ready to sell. Once you have spent the time fixing it up you won’t want to sell! If you do want to sell, then take action and follow our 8 strategies in depth!
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