Selling your restaurant starts a year early: what to do today

The conversation usually opens with “what is my restaurant worth?”. It's the wrong question to start with. The first one is what you'll be able to prove on the day someone asks — because the price that holds isn't the one you ask for: it's the one you can back up.

And that isn't fixed the week a buyer appears. It's built over the twelve months before, with a short list of tasks that cost little and that almost nobody does in time.

Separate the personal from the business

If you only do one thing on this list, make it this one. In almost every owner-operated restaurant there is personal spending running through the business accounts: the car, the household phone, a salary for a relative who rarely appears. While you're not thinking of selling, it makes no difference. Once you want to sell, every mixed-in expense makes it harder to prove what the business really leaves.

Twelve months of clean books are worth more, in final price, than any last-minute fix.

A serious buyer will ask for the last year at a minimum. If that year is clean, the profit proves itself. If it's mixed, it has to be reconstructed out of explanations, and every explanation is a discount you'll be asked for.

Make the paperwork say what you say

What you declare for tax is the independent source a buyer will check your numbers against: it's already filed, it's dated, and it can't be redone for the occasion. The consequence is direct: sales that aren't declared, when it's time to sell, don't exist. Nobody pays full price for numbers they can't verify.

If there's a gap between what the business does and what the paperwork says, every month that gap narrows works in your favour. It's one of the few things on this list that only works with time.

The lease is part of the price

If the premises are rented, two questions are worth real money: how much term is left, and whether the contract can be assigned to a third party. An excellent business on a lease that's about to expire, with no assignment clause, is worth far less than it looks — because part of what the buyer is buying is the right to stay.

The advantage of looking at it a year early is simple: renegotiating calmly, with no buyer waiting, is a conversation. Doing it against the clock is a concession.

Make the business run without you

Ask yourself what happens if you don't come in for two weeks. If the answer is “nothing — the team handles it”, you have a sellable business. If the recipes live in your head, the suppliers only deal with you, and the customers come because you greet them by name, part of the value walks out with you on transfer day — and the buyer will discount it.

Writing down the recipes, training a second-in-command and putting the supplier agreements in the business's name isn't bureaucracy. It's turning what you know into something that can be sold.

The papers you can sort out in an afternoon

There's a second, less glamorous list worth closing off before anyone asks for it:

• Permits and licences, current and in the right name.
• Equipment inventory: what's owned, what's rented, and what goes with the business. This list prevents arguments on closing day.
• Payroll in order: who works there, since when, and on what terms.

None of these papers raises the price on its own. What they do is stop it falling: every document that's missing when a buyer appears is a week of waiting or a doubt planted, and both cost money.

And in the meantime, not a word

The best part of preparing early is that nothing on this list gives a sale away. Tidying the books, renewing a contract, documenting the operation: it's what any well-run business would do. Nobody needs to find out anything, and that discretion is worth money — a business that's known to be for sale loses staff, suppliers and negotiating room before the first offer arrives.

If in the end you don't sell

It may happen that you do all of this and decide to stay. Nothing is lost: a restaurant that can be sold well is, almost by definition, a well-run restaurant. Clean books, a solid lease, a team that operates on its own and papers in order serve the owner who stays exactly as well.

The preparation pays for itself, even if in the end you don't sell.