So you’ve found a prospective buyer for your business. To move forward, the buyer needs to conduct due diligence on your business. In this step, your buyer investigates your store and tries to get as much information about it. This involves conducting an ocular inspection of your store. How do you prepare for such an inspection and make sure that your buyer considers your business a worthy investment?
Due diligence is one of the most essential steps in a business sale, put in place to ensure that all parties are engaged in a decent and honest transaction. The buyer reviews different aspects of your business, including your records, financial statements and the physical, brick-and-mortar store itself. Needless to say, you need to prepare for this as the ocular inspection can make or break a successful sales transaction.
If you hired a business broker, they can help you prepare the necessary documents and iron out the details of the inspection. Here are some steps you can do to make your store more appealing to your buyer:
1. Keep your store clean. No one wants a business that looks dirty. Make sure that your store looks as presentable as possible. Most people are visual by nature, so keeping things looking polished will influence your prospective buyers positively. Do not underestimate the power of scent. Leaking pipes, dirty spots and ill-maintained areas all contribute to foul smells that can be a turn-off even to eager buyers.
2. Make sure all equipment are functional. Your buyers will want to know that they are paying for their money’s worth. Unless you have informed them beforehand, make sure your prospective buyers do not encounter a broken switch, problematic cash register, broken AC or any other malfunctioning machinery or devices.
3. Prove that your business is licensed and secure. All business owners want to make sure that their investments are not compromised at any time. Encourage your buyers by showing them your security implements, such as CCTV cameras, alarms and you fire exit.
4. Be on time. Most inspections are arranged with the buyer making an appointment. If you are not in your store full-time, be sure to not make your inspectors wait. Prospective buyers are more likely to trust sellers who are professional and who value their time.
5. Keep relevant paperwork within reach. Your buyers may need to refer to certain data or you may need to support certain claims. Keep documents such as financial statements, licenses, certificates, contracts and lease, among others within reach for easy perusal. You may even place them where inspectors can see them, if possible.
6. Be prepared for questions. Give the buying party the freedom to explore your store but always be prepared to extend assistance should it be needed. Be prepared for questions, too, as there may be things that your buyers want to know but are not in the documents you provided. Here are some common questions from buyers:
- What are the challenges you are facing right now?
- What customer profiles do you usually encounter in the business?
- Who are your key suppliers?
- How do I succeed in this business?
7. Maintain confidentiality. If you want to keep your business sale confidential, you have to make sure that information is released only to the right parties to avoid unneeded complications. These parties may not include your own employees. As such, ocular inspections may be done during off days, partly to keep things under wraps and partly to ensure that business is not disrupted. If your store operates seven days a week, you can discuss with your business broker strategies to ensure that you are selling your business with the right amount of confidentiality.
No detail is too small if you want to ensure the success of selling your business. Think of your buyer as one of the most important customers you will entertain in your store and make the experience as smooth as possible.
What do you think needs to be done to further encourage your prospective buyer to go through with the sale? Tell us below.