Stay Smart About Africa

5 Things to Keep in Mind When Looking to Sell your Business

Small businesses are an integral part of Africa’s economic development.

If you have spent the last few years pouring your efforts into growing your business and you have seen it succeed despite the odds, then it might be important to you that the business is sold so that it continues to be part of the economy and employment on the continent.

The process is, however, stressful and so it could be useful to keep these five things in mind when selling so that you get through it unscathed.

  1. Are you dispensable?

Small businesses on the continent play a large role in creating employment and, hopefully, as a business owner, you have paid attention to upskilling your workers and training them.

This will work in your favour during the sale of a business because, if the business can’t run without you, there is very little value when you are gone.

In the months or even years coming up to the sale of your business you should pay attention to the staff that you have and how able they are to run things without you.

2. Will your business be profitable in 5 or 10 years after the sale?

Buyers will want to be sure of future profits. If you have the sale of your business in mind for a long time, then it is worth considering how your business is able to adapt to trends and take on board new technologies.

A business that is profitable now may not be profitable in 5 years if it is not able to adapt. New technologies are popping up in Africa all the time as people find creative ways of dealing with the unique characteristics of the continent. Is your business up to date?

Consider how you are making payments (mobile payments continue to thrive in Africa) or how you are adapting to new energy possibilities (solar energy is increasingly getting attention on the continent).

3. Does your business stand out?

There are a lot of businesses that are being bought and sold and so it is easy for your business to get lost in the noise. It is important to focus on what it is that makes your business unique if you are going to be able to attract the right buyer.

There are several ways that you can do this. Think about what markets are expanding on the continent. Does your business relate to these?

4. Do you know if the buyer is serious?

There are a lot of people that will make queries about buying your business but there are far fewer people who will have the funding to do so.

The percentage of small business loans that get rejected is high in most countries in Africa and just because someone has made a great offer does not mean that your work is done.

If you want to qualify whether a buyer is serious or not you can ask them what kind of business they are looking for in terms of turnover, profit or size. If your business does not meet these criteria or a buyer is too vague about this, you can usually rule them out.

You can also enquire about how they are intending to finance the purchase. A serious buyer will usually already have started looking to banks or investors for money and will be able to prove this to you.

This might also give you the opportunity to see if they have written up a serious, thorough and well researched business plan which can also show you that they are a real potential buyer.

5. Should you get help?

Trying to decide whether to use a broker or not seems like a difficult question. Before you make this decision, you will need to do your research and see whether or not you can find the right broker.

You will need to do your due diligence on the broker that you intend to use and find out what their track record is like. Make sure that they have experience with your particular industry.

Most importantly, you need to find somebody that is honest and that you trust.

By Anthea Taylor, Assistant Editor at Dynamis. Anthea writes for all titles in the Dynamis stable including, and as well as other industry publications.

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