Advice on how to prepare your local retail shop for sale

Selling a retail business is like selling a house; you need to prepare it so that it looks appealing to prospective purchasers. Work undertaken before putting the business on the market can deliver a better price outcome.

The following is designed to help any local indie retailer prepare their shop for sale:

1. Make it look and feel appealing. There are people who will look for a challenge (opportunity). However, most buyers want to see a business they understand and feel they can run.
2. Ensure that your processes are documented so that anyone of any skill level can feel confident that they can run the business.
3. Eliminate dead stock.It looks bad on the shelves and bad on the books. Purchasers should not pay full wholesale for inventory more than six months old, as your poor buying or management is not their obligation. Fix this before putting the business on the market.
4. Streamline operations.Make the business look easy to run by ensuring that it’s easy to run for you. The easier it looks to run, the more interesting it’s to people who don’t understand the business.
5. Maximise profit.What anyone will pay will depend on the actual profitability of the business.
6. Be happy.Owners who talk down their business will find it harder to sell it.
7. Keep your social media presence up to date.Today, many people check out a business online before looking at it in-store.
8. Get your paperwork in order.Early on, get business documents together.
   1. Premises lease
   2. Equipment leases
   3. Employee records
   4. Product forward orders
   5. Franchise documents
   6. Supplier agreements
   7. Details of any forward orders
   8. Any other documents relating to the operation of the business, including manuals for any equipment items
9. Choose a broker appropriate to your type of business and circumstances.

Success in selling your shop depends on the work you do to prepare it for sale. Time spent well in advance preparing the business for sale could make the sales process easier and more successful.

Don’t Wait for a ‘Sold’ Sign to Start Planning

Timing is the final ingredient in a successful exit. Ideally, you should begin this grooming process 12 to 24 months before you actually intend to list. This lead time allows you to show a consistent upward trend in your financial statements and proves to a buyer that the improvements you’ve made are sustainable, rather than just a temporary “paint job.” A business that shows steady growth and organized leadership is far more likely to spark a bidding war than one that looks like it’s being offloaded in a hurry.

The Value of a Clean Break

Ultimately, a well-prepared business is one that can function perfectly without you. While it’s tempting to remain the “face” of your shop until the very end, true value lies in transferability. By stepping back from daily tasks and letting your documented systems and trained staff take the lead, you demonstrate to the purchaser that they are buying a functional engine, not just a job. When a buyer can envision themselves in your shoes without fearing a steep learning curve, you have successfully moved from selling a “project” to selling a “turnkey asset.”

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newsXpress is a marketing group that supports small local independent retailers to thrive. Find out more at help@newsxpress.com.au.