There may come a time when you start to ask yourself, “how will I sell my electrical business?” The process of selling an electrical business can require years of planning and professional assistance. Whether you're aiming to retire, start something new, or want to pass on your legacy, understanding the technical process of selling your electrical business is crucial to getting a fair deal.
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- Decide when to sell
- Keep clear records
- Get a business appraisal and professional help
- Calculate your earning power and seller’s discretionary earnings
- Create an exit strategy
- Find buyers
1. Decide when to sell
Timing is everything when it comes to selling your electrical business. It's not just about when you're ready to move on, but also about when your business is in the best possible position to be sold. Experts recommend preparing for at least a year or two! Your aim will be to demonstrate a period of sustained growth and profits that show a strong track record and future potential. It may seem counterintuitive, but waiting to sell until your business reaches its most successful, profitable point is often the best strategy, as any prolonged dip in profit will negatively affect its resell value.
2. Keep clear records
A successful sale begins long before you decide to list your business on the market. For electrical business owners, the first step towards a seamless sale is maintaining clear, comprehensive, and organised records. Using a financial management system, such as Tradify, which manages your invoicing, timesheets, jobs, and online payments, simplifies daily operations and improves your business' appeal to prospective buyers.
Tradify also connects with your accounting software, making it much easier to generate financial statements and track your ongoing costs.
For free tools to keep your business records on track, try:
- Cash flow forecasting and profitability for trade businesses
- Small business break-even analysis for tradespeople
- Small business sales forecasting for tradespeople
3. Get a business appraisal and professional help
The next step to selling your electrical business is getting an accurate business appraisal. Professionals can offer invaluable insights and guidance, leveraging their experience to highlight your business's unique strengths and address any potential challenges head-on. Using professional brokers, accountants, and legal advisors can be key to getting the best sale price, plus, they ensure a compliant and smooth legal process.
A professional appraisal gives you and potential buyers a clear, objective view of your business’s worth. It should factor in your
- Financials
- Customer base
- Equipment
and intangible assets like brand reputation and client relationships. This lays the groundwork for your selling strategy, helping you understand the true value of your electrical business in the current market.
4. Calculate your earning power and seller’s discretionary earnings
Understanding the financial health of your electrical business goes beyond just knowing your annual revenue or profit margins. Calculating your Seller’s Discretionary Earnings (SDE) is a critical step in the sale process, as it offers a more accurate representation of your business’s true earning potential. SDE adjusts your business’s net income by adding back non-essential expenses, owner’s compensation, and any one-time expenditures that don’t reflect the ongoing operations. This is particularly important to potential buyers, as it provides a clearer picture of the business’s operational profitability and cash flow.
5. Create an exit strategy
Selling your electrical business isn’t just about negotiating a sale price and handing over the keys. A well-thought-out exit strategy should outline the operational handover process, including training for the new owners, transfer of supplier and client relationships, and any post-sale support you agree to provide. It should also address how you plan to communicate the change in ownership to employees, customers, and partners to maintain business continuity and trust. Having a clear exit plan not only facilitates a smoother changeover but also reassures buyers about the stability and future prospects of the business.
Consider your:
- Future needs: Will the new owner need to buy new equipment, or train or hire staff?
- Management: Can the team handle the business after you leave?
- Profitability: Are your pricing and profit margins set for future success?
- Business Plan: Is there a clear plan for the new owner?
6. Find buyers
The final step in selling your electrical business involves identifying and engaging with potential buyers. This stage requires a strategic approach, as different types of buyers have varying motivations and interests.
- Individual buyers may be looking for a turnkey business, which they can step in and take over without significant changes.
- Strategic buyers might be interested in your client list, geographical position, or specific services, to expand their business.
- Private equity firms could be searching for the potential to scale your business, using their resources.
Using a business broker to streamline this process can connect you with the most suitable buyers. A broker can also help maintain confidentiality during the initial stages of the sale, ensuring that your business operations continue unaffected.
Getting prepared to sell? Get your admin sorted and start experiencing the benefits of an organised business. To run a successful electrical business, try Tradify free for 14 days. Or, pop into one of our free walkthroughs for a demonstration. 
