MBA1274 Why You Should Get Your Business Ready for Sale Now

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This is not about getting the best price or finding an ideal buyer. This is about cleaning your home. This is about getting your business in order, getting things organized I got this exercise, this piece of advice from Patrick Campbell who's the founder of ProfitWell and is a common in the SaaS world software as a service when somebody says get the business ready for sale, what it means is that getting certain things organized in your business so you're not sloppy, so you're on the up and up. So if somebody does want to look into your business to invest, to become a partner, to buy, at one point you're ready. You have everything set to go. You don't have to clean up before the guests Come over. We'll talk about in today's episode what those things are, as well as how to do them. Recently, Nicole and I did this in our business. And I'll tell you the positive effect it's had on us personally as founders, as well as the team and the business as a whole. Can't wait to get into this one. So let's get into it. Let's get down to business. Getting your business ready for sale really means putting the right systems and documentation in place, so if an outsider comes in, they can easily see how your business runs, what the rules and regulations are, and how to pick up with minimal confusion. This is also very, very good to do just in case you get audited. When you go through an audit, the auditor is going to go through all of this. Your contracts, your receipts, your payments, your expenses, your transactions, who does what and how, job descriptions, all that stuff. And by doing this before you need it, it really gives you this sense of calm and peace that you're actually running a good business, a business that is on solid ground. It also creates that culture in your business in terms of your team. Your team feels like, hey, I'm part of something legit that's organized, that knows what they're doing. So today I'm gonna share with you some areas you can tidy up today, if it's not tidy already. To get your business prepared for sale, first thing, your finances. Money coming in, money coming out. You should have some sort of organized filing system for your expenses. We use Dropbox. We put all our receipts in there. We organize them per financial year, and we use an accounting software called Xero, which takes care of our in and out income. But having copies of receipts are actually still important. And you can just have digital copies, which is great. And once you have a digital copy, you can throw out the physical copy. But every transaction you make, you should make it a habit to put it in your filing system. Whether you're booking a flight for a trip, a conference, conference tickets, you're buying office equipment, any kind of expense, you should have your receipts. This will cover you just in case you are claiming something as an expense and they want proof for it in an audit, or if somebody's going to come in and take a look at your business for purchase, or to partner with you or to invest. Same thing goes with revenue. Where's your revenue coming from? For most of us, you know, we have one revenue stream. Some people have many revenue streams. Make sure it's clearly documented where it's coming from, how it's getting deposited in the account. If there's any kind of currency conversion, how's that happening? An easy way to kind of clean this all up is to hire an accountant. I highly recommend you hire a part time accountant. It can cost you a few hundred dollars a month. There's a lot of services online you can look up and this person can really help you get started, set up your systems, and then we could just follow from there. I love the app Receipt bank, which ties into Xero, which is an accounting software like I mentioned. And Receipt bank allows you to take a photo of your receipt. It reads the information and pops all the information to Xero for you automatically. Next, contracts. Any kind of contract, any kind of team member you have, you. You need to have some sort of documentation. Whether they're a freelancer, whether they're a full time employee, whether it's just project work, whether it's even just a small thing like you ordered somebody to do work on Fiverr. You need a document that says what the relationship is, how long they've been working, how much they've charged you, all that kind of stuff. And you need a filing system for that as well. We have clear contracts for everybody who works with us with job descriptions, what they do, how many hours they do it for, all that kind of stuff. Because these are expenses. These also the people that make your business happen. This is part of your business, not just your product and your sales. It's the people that make it happen. And somebody who's gonna look to buy your business, somebody who's looking to invest in your business are gonna wanna know how do you split up your workforce? Who are these people, where they're coming from, how much are you paying them, what kind of work are they doing? And this is an easy way to document all this stuff and keep it organized. Next, legal. Make sure all your legal documents are in order. Whether you register your business as a corporation, an llc. Make sure that you're up to date, that your actual license is up to date. You're gonna have to make sure you check with your own local area. Every country is different. Your terms and conditions, your privacy policy on your website needs to be made sure that it's up to date and correct. Make sure you have a lawyer give a. Once over again, you might think, oh, a lawyer is gonna be expensive. Actually, it's actually not that expensive. It's gonna require an hour or two of their time. We're talking about 2, $300, maybe up to $500, but it's definitely worth it because it's one time and it's, you know, something that you can make sure that is solid and people are signing up for services and products based on this information, make sure it's legit. And of course, if somebody's interested in your business, they're going to make sure it's legit. Of course. Ownership of the business, who are the owners, who are the stockholders? What's the percentage for everybody? This should be clear, this should be documented and these documents should be in digital form, you know, scanned copies, backups of these. And of course a physical copy is always handy to have as well. Now we talked about finances, but this next category, metrics, is important and it includes more than just, you know, money in, money out. We're talking about mrr, monthly recurring revenue, ARR, annual recurring revenue, arpu, average revenue per user, your churn, numbers, all that stuff. And a good way to easily get that is from some sort of business metric tool, something like Profitwell or Bare Metrics or Chart Mogul. If you're getting started, you're looking for something free and enough, then ProfitWell is something you want to look at, but you also need other metrics like your analytics. So Google Analytics is a great tool, it's free, but you need to be tracking your analytics, your traffic, your conversions, all that kind of stuff as well as your metrics. In terms of leads, how many emails do you have, how many leads you have, how many users do you have, customers, all that kind of stuff. You, you should have this information handy and easy to access via some tools. These are some metrics you need to have handy if you're even going to have a conversation about investment or somebody buying your business or even through an audit. In an audit you actually have to prove you're a legitimate business and that you're going to be here for the long run. This is especially true if you're applying for, you know, a government grant or tax free loan, that type of thing. Next is assets. Whatever business assets you have, you need some sort of documentation that's handy for you. If you're an online business, this is your domain. Who owns the domain? Where is it registered in terms of who's registrar, how long do you have that domain registered for? Is it for the next two years, three years? What's that situation like if you own a physical business, a physical store, who's on the lease, how long have you had that lease? These contracts need to be handy. Same thing if you have, you know, a warehouse, who fitted out this Warehouse, how much did it cost? What about equipment that you need to run the warehouse? That type of thing. Next is vendors and suppliers. Depending on your business, you're going to have contracts with vendors. If you have a restaurant, you probably have a contract with, you know, your beverage vendor. You have a contract with your vendor that supplies you with tablecloths, whatever it is. This is a contract, an agreement with people that help you run your business. And this is an asset, so to speak, because somebody who's going to come in and take over your business, you have things in place. Hey, I already have a contract with these people, so you're good to go for the next two years. So suppliers and vendors, any information that deals with that, whether you have a supplier for packaging your product or a vendor to deliver your product. Some people have a contract with fulfillment services, delivery services. This is gold. And this is something you need to keep track of and have documentation for.

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Guys, to wrap up today's episode, getting your affairs in order, so to speak, in your business is something you want to do sooner than later, something you want to do now. Everyone on the team is going to appreciate it. The fact that you have everything organized, they have an easy way to find things, and you're ready for anything that you need in the future. Whether you're selling, whether you're getting investors, whether they're getting a partner, whether you're applying for grants or some sort of loan, you're all set. One thing I didn't mention, which is super helpful is creating a team handbook, and this could be simply done using any kind of software, even a Google Doc or a Trello board. And this is basically a handbook for your team. And we have an episode on that, how to build your own team handbook. It's episode number 1044. Check it out because it's a great little exercise to do with your team so new hires know where to find information, and it's also a great asset to pass on if somebody does come into your business and take over. Thank you so much for listening. Make sure you hit subscribe so you don't miss a beat by hitting subscribe on whatever you love to use to listen to podcasts. Whether it's Spotify or Apple podcasts or Stitcher Radio or Tunein or whatever it is, hitting subscribe makes sure that you get the next episode as soon as it publishes right on your device. Do it right now because you don't want to miss tomorrow's episode. All right, before I go, I want to leave you with this. Today's episode, today's exercise. It's not sexy, it's not fun, but it's important and you're going to feel a whole lot better after it's all done. And don't forget, once you do it, you just got to maintain it. So most of the work is done at the start. Maintaining it is actually quite easy. Getting organized really relieves you of that pressure of I wonder if things are going right. I wonder if I'm doing it right. Put it in your calendar today. When are you going to get your business ready for sale? When are you going to implement the things I mentioned? Dedicate some time. Maybe it could be a week where you block out and make it happen. Thank you so much for listening and I'll check you in tomorrow's episode. Q and A Wednesday. I'll see you then. Take care.

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