The Ultimate Checklist: Prepping to Sell

Financial Statements: Ensure profit and loss statements, balance sheets, and cash flow reports are accurate and up to date for at least the past three to five years.  A common issue is sellers having disorganized financials and unclear expense items. Many don’t close their books monthly or maintain proper financial statements. They need organized records, explicit cost tracking, and timely monthly closings for a smooth process. Hiring a bookkeeper or outside accountant can help. 

Summarize Non-Business Expenses: Track and summarize any personal or non-business expenses in the profit and loss statements for the past three to five years. A buyer will want to understand the business’s profitability without those personal expenses. This is a frequent stumbling block as it is common for business owners to run personal expenses through the business, but identifying and categorizing them in detail will be necessary, especially when reviewing historical financial records. 

Job-Level Profitability Tracking: Ideally implement detailed job-level profit and loss tracking to demonstrate operational efficiency and financial discipline. 

Payroll Documentation: Maintain transparent and well-structured payroll records, ensuring they align with actual employee compensation and business performance. 

Tax Compliance: Ensure all tax returns, payroll filings, and sales tax documentation are accurate  to avoid any compliance issues. 

Increase Customer Retention: Retaining long-term customers with high satisfaction rates indicates business stability and lowers risks for a potential buyer. 

Diversify Customer Base: Avoid over-reliance on a few key clients. Ensure that no single client accounts for more than 10% of the total revenue. 

Secure Long-Term Contracts: Renew or extend existing customer contracts near expiration ideally to 3 years or longer to ensure stable recurring revenue. 

Strengthen Employee Retention: Reduce turnover by investing in employee benefits, training programs, and workplace culture. 

Develop a Succession Plan: Ensure that key management personnel are in place to maintain business continuity without direct owner involvement. 

Create Detailed Standard Operating Procedures (SOPs): Develop clear guidelines for all business functions, including cleaning processes, customer service protocols, financial reporting, and contract renewals. 

Maintain Employee Handbooks: Ensure comprehensive documentation of company policies, procedures, and compliance standards. 

Optimize Technology and Systems: Implement robust business management software for scheduling, payroll, accounting, quality control, and performance tracking. 

Improve Customer Relationship Management (CRM): Maintain organized and up-to-date client records, contracts, and service histories. 

Job Costing and Budgeting: Develop detailed budgets for each account, ensuring clear tracking of costs and profitability. 

Reduce Dependence on the Owner: Delegate key responsibilities to managers and team leaders to demonstrate business sustainability without owner involvement. 

Evaluate and Reduce Overhead Costs: Streamline expenses to improve margins and operational efficiency. 

Eliminate Legal and Compliance Risks: Resolve any outstanding disputes, lawsuits, or regulatory issues before engaging with a buyer. 

Ensure Proper Licensing and Insurance: Maintain up-to-date business licenses, liability insurance, workers’ compensation, and any other required certifications. 

Monitor Key Performance Indicators (KPIs): Track and improve customer retention, employee turnover, and job profitability metrics. 

Strengthen Online Presence: Ensure the company website, social media, and online reviews reflect a positive brand image. 

Update Marketing Materials: Refresh brochures, presentations, and digital content to highlight the company’s strengths and market position. 

Showcase Customer Testimonials: Collect and present recent positive feedback from satisfied clients to build credibility. 

Enhance Physical Assets: Maintain office space, equipment, and service vehicles in top condition to reflect operational efficiency. 

Document Competitive Advantages: Highlight unique, differentiating selling points, such as specialized cleaning services, eco-friendly practices, or industry certifications. 

Develop a Transition Plan: Outline a clear plan for transferring client relationships, employee responsibilities, and operational oversight. 

Ensure Key Employee Commitment: Engage key staff in the transition process and secure commitments for post-sale employment where necessary. 

Communicate with Stakeholders: Plan how and when to inform employees, customers, and vendors about the transition to maintain confidence and stability. This can often be done in coordination with the buyer. 

Organize Vendor and Supplier Agreements: Ensure all supplier contracts are up- to-date and transferable to the new owner. 

Refine Internal Reporting and Analytics: Improve tracking and reporting mechanisms to provide clear visibility into business performance. 

Organize and Digitize All Documentation: Create easy access to all business records in a structured format by ensuring all are digitized, descriptively named, and organized. A seller should not underestimate the importance of digitizing records; it’s a request sellers are frequently unprepared for that can delay the sale. Whatever the sale horizon, it’s a process worth starting now. 

Address Any Operational Weaknesses: Identify and resolve any lingering issues before presenting the business for sale. 

Perform an Internal Audit: Conduct a thorough review of financials, customer contracts, and compliance to ensure all records are complete. 

Ensure Business Continuity Measures: Have a strategy in place to keep operations running smoothly during and after the transition.