Small Business Resource Center Tools


Tools to help your business.

Use these tools and calculators to check the financial health of your business.

Getting the Best Price for Your Small Business

Preparing in advance for the sale of your business will help you get the best possible price. There's plenty to consider before determining what your business is worth and whether you're able to attract the right buyer.

Selling a business is often the culmination of years of hard work and it can be a difficult, emotional and time-consuming task. It's not something most owners do more than once. To get the price you want, you have to get it right the first time.

Request a call from one of our Business Banking Specialists.

Expand Be sure to plan ahead

If you're selling your business out of choice rather than necessity, a common mistake is to sell too early. Spend sufficient time building a stable and profitable foundation. Grooming your business and preparing an exit strategy will allow you to make it more appealing to potential buyers.

Build a strong financial record
Buyers will want assurances that your business has a stable history and a sustainable future. Try to show stable financial cash flows through the year. Delay or bring forward major purchases to help achieve this. Be realistic about provisions for bad debt and old stock.

Improve working capital
Improve your working capital position by selling underutilized equipment and assets. Efficient stock management and tighter credit control will also improve working capital. See our small business savings accounts to help organize your future.

Keep accurate information
Buyers will see more value in your business if you have good systems, like operating manuals and an up-to-date customer database. Buyers want accurate information quickly and any inability to supply this information, or errors in the data you supply, will undermine their confidence in your business.

Develop excellent systems
If necessary, improve your systems or develop new ones. Show that your:

  • Accounting systems are accurate and capable of generating up-to-date reports.
  • Key performance indicators are regularly monitored.
  • Business has a stable customer base and effective customer management systems.

Keep your staff informed
A potential buyer will most likely need staff straight from the outset. For this reason, it's best to let your employees know about the eventual sale of your business. Not all of them may want to continue under new management, whereas others will want security going forward.

Ongoing staff add value
From the buyer's perspective, quality staff already contracted and performing well for the business will be an advantage. They already know the ins and outs of working for the business and can help ensure a smooth transition, adding value to your sale price.

Expand Determine what your business is really worth

Your business will be worth what someone's willing to pay for it – but it's crucial to get an idea of what that price is. Economic trends, the state of your industry's market and the price similar businesses have sold for all need to be considered.

Tidy up loose ends
Potential buyers want to purchase a thriving business, not one with issues. A few quick fixes can go a long way towards being able to increase your sell price. Think about:

  • Making sure all tax payments are up to date.
  • Reducing liabilities as much as possible.
  • Ensuring your business's records are current.

Present your brand
Ideally you'll have built up long-term relationships between your customers and your business's brand. It should be clear to them what your business represents and values. Following through with a brand strategy takes time but the rewards will come when you offer your business for sale.

Increase your business's value
A potential buyer will be looking for added value when deciding which business to purchase. Having a brand that's been built through honesty, innovation, a consistent tone of voice, and a connection with your customer base will make your business more valuable in prospective buyers' eyes.

Get the best advice available
You'll need to inform your accountant, business advisors and bank manager of your intentions. They can provide a range of ideas and advice to help you plan a successful sale. Choose advisors or business brokers who specialize in selling businesses.

Find a competent advisor
Competent advisors can fill many roles, which include:

  • Providing a realistic business valuation.
  • Widening the list of possible buyers.
  • Approaching potential buyers without revealing your identity.

Have a chat with one of our Business Banking Specialists for timely advice.

Expand Targeting a potential buyer

You may want to keep your own business anonymous by using an advisor or a business broker. It's usual to approach a business that might be interested through its advisor (for example, its accountant), unless you have a better contact. The advisor can direct you to the appropriate person.

You and your business broker need to get to the point where a potential buyer puts their purchasing intentions on paper. If numerous offers come in for your business, you'll have to dissect each one to find the offer that most closely matches your asking price and exit strategy.

Counter offer
If none of the offers are acceptable, you might propose a counter offer. You should be looking to get an agreement on the major points of the proposal, which may include:

  • Price – when it's time to exit your business, the price must be right.
  • Timeframe – when the takeover will occur and whether you'll have any further involvement.
  • Structure – how payment will be made.

Evaluating offers
There are many ways of paying for and taking over a business. You'll need to carefully review what each offer includes and how it is structured. Even though price will most likely be your bottom line, it's always important to qualify the buyer. No matter how great an offer may sound, it's worthless if it isn't properly financed.

Expand Next steps

You may want to keep your own business anonymous by using an advisor or a business broker. It's usual to approach a business that might be interested through its advisor (for example, its accountant), unless you have a better contact. The advisor can direct you to the appropriate person.

Collapse Important Disclosures