Here's how we'd plan it if you're 6 to 12 months out.
12 months out: fix what shows up in the numbers
Anything that needs a full year of trading to prove belongs at the top of the list.
Separate personal spending from the business. Your car, phone, family holidays and the odd personal purchase can all be added back at sale time, but every add-back is something a buyer has to take on trust. A clean year of accounts with none of it is far more convincing.
Get monthly management accounts going. Buyers want to see how this year is trading as well as last year's annual accounts. Monthly profit and loss statements from your accounting software, reconciled and up to date, make that easy.
Deal with owner dependence. If customers ring you for everything, start moving those relationships to a manager or senior staff member. A business that can run for a month without you is worth noticeably more. One that can't survive a week without you is a harder sell.
Look at where the profit comes from. If one customer makes up a big slice of revenue, now is the time to widen the base. If one product line loses money, decide whether to fix it or drop it.
9 months out: lock down the things a buyer will check
Your lease. Check how many years are left, what renewal rights you have and what the assignment clause says. A buyer's bank will often look hard at a short lease. Negotiating a renewal before you list is usually easier than doing it with a buyer waiting.
Contracts in writing. Key customer agreements, supplier terms and any exclusive arrangements should be documented. Handshake deals are hard for a buyer to rely on.
Employment agreements. Every employee should have a signed written employment agreement, which is a legal requirement in NZ. Check holiday pay and leave balances are calculated correctly. Underpaid holiday pay is a liability buyers increasingly look for.
Licences and compliance. Food control plans, alcohol licences, building warrants of fitness and health and safety records all need to be current. Note which ones transfer and which the buyer will need to apply for.
Ownership of the small things. Your website domain, social media accounts, phone numbers and trademarks should be held in the business name rather than personally.
6 months out: make it look like a business worth buying
Fix the obvious. Service the equipment, repair what's broken and tidy the premises. Buyers notice tired fit-outs and quietly knock money off.
Clear out old stock. Slow-moving or obsolete stock inflates a stocktake and annoys buyers. Sell it off or write it down.
Resolve disputes. Settle any outstanding argument with a supplier, landlord, customer or former employee. Open disputes make buyers nervous and can hold up settlement.
Talk to your accountant. GST treatment, depreciation recovery and how the price is split between goodwill, plant and stock all affect what you take home. Planning this early gives you more options. GST and price allocation are the two areas of tax when selling a business in NZ that most often catch sellers out.
3 months out: get your paperwork ready
Pull together everything a buyer will ask for in due diligence, before they ask for it:
- Three years of annual accounts and this year's management accounts
- GST returns that reconcile with your reported sales
- Your lease, franchise agreement and key contracts
- An asset list with condition and approximate age
- A staff list with roles, pay and length of service, kept confidential until late in the sale
- Licences, permits and compliance records
Having this ready shortens due diligence and signals to a buyer that the business is well run. That's the heart of vendor due diligence: giving buyers what they need before they ask.
Get an appraisal at the start
An appraisal at the beginning of this process shows you where your business sits now and which of these steps would move the price most. Some owners find a lease renewal is worth tens of thousands. Others find their biggest gain is stepping back from the front counter.
Our free business appraisal gives you a written opinion of today's sale price and a clear list of what would lift it. There's no obligation to list.