Building a Business to Sell

Ask yourself this question:

Do you run your business just to provide yourself with an income, or is it also about building an asset that one day you can sell?

Hopefully, the answer is both.

If you’re running a business, it pays to think ahead - especially if you want to sell one day. The best businesses aren’t just profitable; they’re built to be bought. Planning for an eventual sale from the start means a higher valuation and an easier handover when the time comes.

This guide breaks down how to make your business attractive to buyers and set yourself up for a successful sale in the future.

Why Build a Sellable Business?

A business that’s easy to sell gives you options. You can exit on your terms, get the best price, and move on without stress. Here’s why it matters:

• Maximise Your Payoff: A well-structured, well-run business sells for more.
• More Freedom: Selling your business brings financial security which in turn gives you options to consider ideas such as retirement, or, maybe even another enterprise.
• Less Hassle: A business that is built to sell is easier to run as it is not so reliant on the owner.
• Tax Benefits: At the moment, if you sell your business, the first £1m of the gain from the sale is at the reduced capital gains tax rate of 10% rather than 24% for higher-rate taxpayers. If you sell your business via an Employee Ownership Trust, the full gain can be at zero capital gains tax - so it’s well worth planning in advance!

Steps to Building a Business Buyers Want

1. Know Your End Goal

The first step in building a business that you can sell is figuring out what success looks like. Ask yourself:

• How much money do you need/want from the sale? It’s good to have a financial objective in mind, as this helps you focus on annual targets to get you there for the exit.
• Do you want to stay involved after selling? Some owners like to stay on, and others want to walk away as soon as possible.
• Who might buy your business? A trade sale, competitors, private equity, family, or maybe an Employee Ownership Trust? Again, it’s good to think ahead as to what will be right for you, as it may influence some decisions along the way.

2. Get the Structure Right

Buyers want a business that’s well-run and easy to take over. Make sure you have:

• The Right Structure: A people structure in place with clear reporting lines, and staff that are aware of their objectives and responsibilities
• Efficient Operations: Strong systems and processes - the fewer inefficiencies, the better.
• A Strong Management Team: A business that runs without you is more valuable, so having good people around you is essential - you can’t build a business with a team that is lacking.

3. Sort Out the Finances

Buyers will dig into your finances, so be ready! This includes:

• Keep Clean, Transparent Records: A strong documented history of your business’s performance gives potential buyers confidence.
• Boost Profitability: More profit = higher sale price. Make sure you are doing all the basic housekeeping activities that increase profitability.
• Tidy Up Debt: Buyers don’t want to take on your financial baggage.
• Know Your Value: Regular valuations help you know you’re on track to achieve your exit goals.

4. Build Strong Business Assets

Your business is much more than just the finances and the business model. To make your business stand out, focus on:

• Brand Reputation: A strong brand adds value. Does everything in your business reflect your brand?
• Loyal Customers: Repeat business is gold. Recurring income is attractive to any buyer, so how can you increase this?
• Intellectual Property: Trademarks, patents, unique processes? Lock them down, and register them.
• Revenue Streams: Relying on one income source can be risky. How can you generate more income streams, whilst also being aware of over-dependence on just a few clients?

5. Remove Yourself from the Day-to-Day

If your business falls apart without you, it’s not sellable. And no buyer is going to be interested in being reliant on the one person in the business who wants out. Fix that by:

• Documenting Processes: Make it easy for someone else to run things.
• Building a Solid Team: Train leaders who can operate without you and ideally with someone as your deputy.
• Automating Where Possible: Less reliance on manual work, more efficiency and less cost.

6. Plan Your Exit

Selling isn’t just about finding a buyer. Think about:

• Exit Options: Look into the various exit strategies. Will you sell outright, part of the business, merge, or sell to an Employee Ownership Trust?
• Timing: Timing your exit is crucial. Sell when the market is strong and your business is growing, not when it’s in decline.
• Expert Help: Get advice from financial and legal professionals, or contact a business mentor.

7. What Happens After the Sale?

Once the deal is done, what are the next steps?

• Handover Period: Be prepared to help the new owner(s) transition, as you may still need to be involved for several years (depending on the terms of the sale).
• Investing Your Earnings: Take financial advice on how to invest your net sale proceeds; this may be your pension!
• Your Next Move: Retirement? New business? Consulting? Have a strong plan, because you could go from working long hours to having the whole week free - what are you going to do with that time?!

We Can Help You Build a Sellable Business

At UKBM, we help business owners create companies that buyers want. From structuring to financial preparation, we make sure your business is “sale-ready”. Get in touch with us to start planning your exit today.

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