Business matters

Selling Your Business

By Carol Gordon, CPA

It could have been your life’s work or something that you started a few years ago and decided that it wasn’t for you. It’s your business. And now, you’ve decided that it’s time to sell. However long you’ve owned it, it’s personal. It’s a reflection of you and your family.

Typical initial questions for a potential seller are: “What’s my business worth?” “How long does it take to sell a business?” My answer to both of those questions would be “It depends.”

Preparing your business for sale in many ways is similar to preparing a horse for sale. It takes time, thought and effort. You will be wearing multiple hats (nothing new there!). You’re still the owner of the business but you also need to shift your mindset and start thinking like a potential buyer.

What kind of questions would a buyer ask? “How will I fund the purchase of this business?” “What is my business plan?” “What are the potential target markets for this business?” “What are typical monthly expenses?” …… and so much more.

To be able to address these questions and effectively prepare your business for sale, you need to take time to develop and implement a comprehensive plan. The first and most important part of preparing to sell your business is making sure that you understand your business inside and out so that you can address a potential buyer’s question before they even ask it. Not just understanding who the best lesson horse for walk-trot students is and how to fix the frozen hydrant – but EVERY aspect of your business.

The five key areas for your focus should be: 1. Legal – contracts (boarding, lessons, leasing, etc.) and risk management. 2. Finance/Accounting – financials and possible sources of funding. 3. Human Capital – employees, vendors, customers. 4. Information Technology – data and data security (credit card processing, etc.) 5. Sales and Marketing – target markets, advertising, customer retention, etc.

Once you feel confident that you know and understand each of these areas, it’s time to implement a plan.

1. Assess the salability of your business and determine a market value. The best resource for this would be a specialized real estate agent. The real estate agent can explain the best way to prep your property for potential buyers. 2. Find an attorney who specializes in business sales – preferably equine businesses. You have some choices to make as to whether you want to sell the property, the actual business or both. You may just want to dispose of the property but now want to work for someone else and take the customers with you. Or you may want to continue to live on the property but sell your customer list, horses and tack. There are plusses and minuses to either choice so select an attorney who can help you make the best decision. 3. Prepare to speak with potential buyers. Be aware that while you may cater to adult amateurs, someone else might be looking to buy a riding school for children. You may do a lot of the maintenance yourself, but the new owner may have to hire extra help. Be ready to discuss multiple options for various features of your business – e.g. that extra barn that now houses school horses could be used for DIY boarders, leased to another instructor or offer quarantine services. 4. Take your business to market.

Just like selling a horse, taking the time to prepare for the sale is the most important part of the process. But taking the time will make the rest of the process much simpler and less painful. You’ve spent years or perhaps decades working at this business every day. You owe it to yourself to finish the job right.

About the author: Carol Gordon is a CPA with an MBA from Boston College and the owner of Carol Gordon, CPA, which provides consulting services to equine-based businesses. You can contact her at cgordoncpa@gmail.com. If you have any questions that you’d like covered here, please email her with your suggestions.