Preparation is essential to securing the best deal possible when selling any business, especially considering the fact that most buyers prefer to inherit businesses that do not require a significant investment into infrastructure.
One of the most important components of preparing to sell any company is gathering and organizing information for potential buyers. When listing a business, sellers must be prepared to compile data concerning the following items: lists of customers, accounting history, day-to-day operations and know-how, employee information, leases, ongoing contracts, etc. This task can be overwhelming for even the most sophisticated seller.
An ideal seller should implement business management software to make the process of managing data and information more efficient and easier to digest for a buyer. Business management software is an application or set of programs that help businesses support, improve, and automate their processes. This data is helpful in eliminating errors, completing business tasks, reporting activities, and increasing overall efficiency and effectiveness.
Sellers should try to avoid being categorized as “low-tech sellers,” defined as those sellers who have not integrated technology and software into their business processes. When the time comes to sell their businesses, owners are overwhelmed with the task of putting together disclosures and presale documents from their paper files and spreadsheets. This can be both discouraging to the seller and off-putting to a buyer who might want to reduce the purchase price for a business that keeps its accounting records and employee information in a shoe box.
Tips to Become an Optimal Seller
When planning to sell your business, implementing and maintaining business management software can reduce stress when buyers request information during the due diligence period. Here are some tips that can make selling your business more expedient and less stressful.
1. Implement Inventory Management and Customer Relationship Management (CRM) Software Early
Inventory management software allows a business owner to automate inventory processes, which is useful in tracking inventory within the business and ensuring that adequate inventory is available when required. Some inventory management software has the capability to generate real-time data if it is integrated into e-commerce technology or a point-of-sale system. These systems can be helpful when marketing to potential buyers because the seller can compile inventory reports that buyers like to assess when determining the value of a business.
Additionally, CRM software offers a wide variety of services, including storing contact information, scheduling appointments, and customer service. CRM software is helpful when selling a business as it gives potential buyers the sense that your business is organized. The software can also be useful during transition from one owner to another because customer information is located in one system.
2. Use Accounting and Invoicing Software
Accounting software is essential for any type of business. It is a basic record keeping tool, and is useful for storing and streamlining financial information that any seller will need to compile when preparing to sell a business. Having reliable accounting software can save sellers significant costs and liability, as most buyers require a warranty that a seller’s accounting history is up-to-date and accurate.
Invoicing software is a tool that automatically generates billing for rendered services and products. Invoicing software increases efficiency in a business because it saves customer information, allows for users to set up recurring payments, allows the user to send multiple invoices at once, and is more secure than creating invoices by hand. The capability to generate reports of pending and unpaid invoices, which many, if not all sellers require for review during the due diligence period, make this software useful when selling a company.
3. Use Payroll Software to Manage Employee Information
Not only does payroll software increase cost effectiveness, it also saves business owners time. Payroll software has the capability to manage employee calendars, update employers on tax issues affecting employees and the company, and it reduces the potential for human error when determining eligibility for benefits as well as over-time calculations, etc. Payroll software is instrumental when selling a business due to the data it tracks -- the amount of hours each employee works, how much they are paid, and other key information that buyers require to inspect during the due diligence period.
What you invest on the implementation of fundamental business management software for your business is low compared to the benefits they will deliver when you list your company.