February 26, 2013
Today’s article, from BusinessesforSale.com, a website that connects buyers and sellers of businesses, walks us through some of the steps food entrepreneurs should consider as they prepare their businesses for sale so as to maximize the selling price.
Many entrepreneurs decide sooner or later to sell their businesses to move on to another venture or retire.
Here are a few tips for maximizing the value of your food-related business, thereby maximizing the amount of cash you recoup to finance a comfortable retirement or your next entrepreneurial project.
Regardless of the type of business you’re selling, you need to ensure that essential contracts and agreements with suppliers and regular customers should be current, verified, and available in writing.
Your books should not only be in order, but summarised and prepared for review by potential buyers. Tie up any loose ends, pay outstanding bills, and chase bad debt, writing off unpaid, uncollectible invoices.
You will also want your business’s assets to be in the best possible condition before you offer the company for sale.
Whether you’re an online food retailer, a caterer, a wholesale food business, or a mobile food business, you should organize and smarten up your physical premises. It needn’t cost a lot to spruce up your premises, but it will certainly make a difference to the perceptions of interested parties.
Your assets aren’t just physical; they’re virtual too. Make sure your website is as orderly, efficient and attractive as possible. Don’t neglect your SEO work, which is necessary to elevate your Google position for key search terms.
Remember that potential buyers will Google your business and test your website. It’s easy due diligence, important too – after all, how many people look beyond the first two or three entries on a given Google search?
As a caterer, your most important non-physical assets are your employees and your sources of regular customers. Keep staff informed of your plans to sell and reassure them that you will only sell to capable buyers and about the security of their jobs (although don’t make promises that you cannot keep).
If you can, in turn, assure buyers that they’re buying a highly motivated, experienced and trustworthy staff then it makes your asset much more saleable.
Gather all the documentation you can – contracts and the like – that proves the existence and history of your repeat customers. Anything which demonstrates satisfaction with your service, whether it’s a testimonial or an increase in the frequency of their orders, will add gloss to your proposition.
Potential buyers will need to know exactly how much regular income to expect and repeat customers, which effective caterers tend to enjoy high levels of, adds considerable value to a business.
Wholesalers enjoy even higher levels of repeat customers than caterers, so contractual evidence of your customers’ loyalty, applies here too. Secure, extend and renew contracts where you can.
If you beat rival wholesalers on price, then gather evidence that substantiates this.
Refocus your inventory control, cancelling or reducing orders of items that sell poorly, increasing orders of goods that prove popular with retailers.
If you own an ice cream van or any other type of mobile food business, then addressing any maintenance issues and cleaning the van are the absolute bare minimum you should do to prepare for sale.
Perhaps get it repainted and replace equipment that appears past its best. Whether you choose to spend the cash necessary to repair or refurbish your truck depends on your answer to the following question: can you expect to recoup as much, or more, of the cost of carrying out this repair or refurbishment through the sale price?
Impress buyers with your knowledge of your market. Sweeten the deal with promises to impart your knowledge of the most lucrative sites, for example festivals and other events, where you can make the most money in the shortest space of time.
This all comes with a significant caveat. Don’t give away information like this, which in the hands of a competitor could give them an edge on you, until you’re sure that the buyer is trustworthy and a genuine candidate to buy.
Many food-truck owners conduct their business in an informal fashion, insofar as they have verbal understandings rather than contracts where repeat business is concerned. But it’s not enough just to assure a prospective buyer that they can count on repeat business – you need to prove it, persuading customers to formalize their decision to allow you to sell at their event.
BusinessesForSale.com is a world leader in buying and selling businesses online. Their primary aim is connecting entrepreneurs, business intermediaries and marketplaces within the B2B and B2C arenas.