The process of selling your restaurant can be stressful and bewildering, but a clear plan and the right support can make the restaurant sale a successful and profitable conclusion to your business.
PLAN YOUR EXIT STRATEGY IN ADVANCE
The time to start considering your exit strategy is when you first establish your business. What do you want to achieve from your restaurant? Are you looking for a specific return on your investment? Do you intend to run the restaurant for a certain length of time before moving on to a bigger venture or retiring?
If you don’t plan ahead, you risk missing the golden opportunities to sell on a high. Instead you impulsively decide to sell when you realise you are burnt out and exhausted while your business is slumping into failure. And once you can no longer bear to commit to your restaurant, your business will suffer, lowering the restaurant’s value.
MAKE THINGS EASIER FOR YOUR BUYER
Check that all your leases are up to date and transferable. Undertake all repairs and freshen up the place with a fresh coat of paint if necessary. Potential buyers are looking for a smooth transition into ownership. They don’t want to discover the lease is about to expire on both the property and the kitchen equipment. They might look forward to imprinting their personal style, but this won’t include repairing cracked windows or replacing the lighting fixtures.
Prepare all your paperwork to ensure a straightforward sale. First, write up a one-page business summary of your business, describing the type of restaurant, the location, your gross annual income, your net profit and your costs. Compile a Business Offering Package, which includes copies of your lease, financial statements from the last two years, details of the restaurant’s seating capacity and code requirements, plus a list of inclusions, such as furniture or fittings to be included in the sale.
DO YOUR RESEARCH
Arrange for a professional valuation of your business so you can ask for a fair and realistic price. Obviously you will lose money by under-valuing your business, but you will also delay the possibility of a sale if you price yourself out of the market. You can provide potential buyers with a copy of your business valuation will outline the Fair Market Value (FMV) calculated according to the real estate value, the current revenue and potential revenue and the customer base. This document proves that you are selling at a fair price, so you don’t need to haggle.
Also investigate potential buyers. Pinpoint the buyers with appropriate finance and business experience, so you don’t waste your attention on the ones who are simply daydreaming about owning a restaurant one day. You are entitled to request a financial disclosure statement from serious buyers, as you are providing your financial information as part of your Business Offering Package.
RELY ON EXPERTS
A real estate agent, particularly one specialising in food and hospitality establishments, will be able to attract potential buyers through is contact list. Your agent will also shoulder the responsibility of communicating with buyers and arranging appointments, so you can concentrate on keeping the restaurant busy and popular. An agent might also be able to offer expert advice about presentation or significant maintenance issues.
You also need legal support to draw up necessary documents and check your potential buyer’s background. Ask your legal advisor to draw up a purchase agreement form in advance, so you are ready when a potential buyer is prepared to make the big move.
BUSINESS AS USUAL
While you are waiting to sell, keep the restaurant open and offer your best service, regardless of having one foot out the door. Potential buyers want to see a thriving, energetic business with a strong customer base. You “sell” your restaurant to potential customers every day you are in business. Don’t give up just when you need to impress the most lucrative customer of all.