7 critical steps to get sale ready
By Josh Oakes
In 2016 we decided that it was time for a new adventure. We had built our tour business to more than $2 million in annual revenue and we knew we were ready for a change.
How did we know?
It just felt right.
We had been regularly re-visiting our vision for our business and our life for years and in doing so, we knew that we had other things we wanted to achieve.
So, if you get to this point and you want to sell, here’s what you need to do at least 12 months prior.
Step out and empower your team
Nobody is going to buy your business if they think everything revolves around you. You need to start putting the processes, systems and resources in place to ensure it’s business as usual when you’re not around.
Our story worked beautifully. We accepted an offer for the business at Melbourne airport on our way overseas on a six month trip. We navigated due diligence from the jungles of Costa Rica and finalised the sale of the business from the beaches of Ibiza. It was easy to get a prospective buyer who was already excited by our business to get excited by the lifestyle it could provide.
Make your numbers look awesome
There are plenty of ways to do this. Chase every lead. Push hard. Get the team incentivised to hit a few ambitious targets. Stop taking cash payments and pay your whack of tax.
Choose your broker
We bombed this first time. We were naive, rushed the process and didn’t do our homework. This mistake cost us $6,000 and six months.
However, it did lead us to the broker that ended up getting us our result.
Everything happens for a reason, right?
We met with our first broker on a Monday and he had our business on the market by Tuesday afternoon.
It took around six weeks for us to realise that the likelihood of this guy ever selling our business was zero.
He didn’t understand our business, our numbers, he didn’t know our story, the right kind of buyer and he couldn’t answer any of the many questions an interested party was asking when they contacted him.
His strategy was: advertise and wait for the phone to ring
After that failure, we met with six more brokers before finally settling on #7.
By contrast, after our first meeting, our new broker spent three months preparing our business to go on the market.
He was a numbers man and he was on the phone to us daily with another set of his questions.
By the time our company hit the market, he knew our business and our numbers better than we did.
Draw up a list of potential buyers
This is YOUR job, not your brokers. Yes, he or she will be compiling their own list (if they’re any good) but I will guarantee you that your list will be more full of potential. The lesson here — get involved — it’s a team effort selling your business and your input is absolutely critical.
Sell a dream
Don’t let anybody tell you that a business is bought and sold off a spreadsheet. No. You need to sell a vision and create a narrative about where the business is going and what life will be like holding the reins of this business. It is not a case of taking a few years’ financials and applying a formula specific to industry. This is what a buyer will aim to do — don’t accept that.
Don’t fudge the facts
You’ll be tempted to… and you might get away once or twice with something in that grey area or something that is ‘open to interpretation’ if you can explain it away for the most part.
But any more than once or twice and a prospective buyer is going to start losing interest. They’re going to start thinking “what else are they hiding” and they’ll go cold. Be open and honest in the due diligence phase, but be prepared to argue a point.
We had one big ‘plug the leaks’ campaign 12 months before we sold and everyone in the company got involved. Our staff were requested over a one month period to take a forensic look at EVERY part of their job and ensure that: all costs were absolutely necessary and that there wasn’t a more cost effective/smarter way of doing things.
Josh Oakes and his wife started their own Melbourne day tour company in 2006 with no experience in business or tourism. By 2016 it had grown to bringing in over $2 million annually in revenue, before they sold the business for over $1 million in 2017. They achieved this without working themselves into the ground. Josh launched thesunshinetribe.com recently, to help operators and travel professionals build their businesses while enjoying a great lifestyle.