Selling Your Business in the Next Year? A Month-by-Month Readiness Plan for Owners

Most owners decide to sell long before they start preparing. Then a buyer shows up, diligence starts, and three weeks are spent finding lease amendments, explaining add-backs and answering questions about why the books do not tie to the bank. Every one of those weeks gives the buyer another reason to lower the price or add conditions.

A year of preparation changes that. Here is the plan we would give a friend who owns a profitable business with a few million dollars of revenue and wants to sell within twelve to eighteen months.

Months 1 and 2: decide what you want

Before anything else, write down your answers:

• Why are you selling, and why now? Retirement, health, burnout, a new opportunity, or a business that has outgrown the way it is run.
• What do you need from the sale? Talk to a financial planner about the after-tax number you need, not the headline price you want.
• What do you want to happen to your people, your customers and your name?
• What role, if any, do you want after closing, and for how long?

These answers determine which buyers fit. A competitor, a searcher, an independent sponsor and a private equity fund offer very different outcomes. See who should buy your business.

Also assemble your team: a CPA who has worked on business sales, an attorney who does M&A, and, if you want one, an advisor to run the process.

Months 2 to 4: clean the numbers

Buyers buy earnings, and lenders now size acquisition loans on documented, historical earnings. This is the most valuable work you will do.

• Close the books monthly, by the 10th of the following month, reconciled to every bank and credit card account.
• Tie revenue to bank deposits for the last 24 to 36 months. A quality of earnings firm will.
• Separate personal expenses from business expenses going forward.
• Document every add-back with an invoice, payroll record or tax return line.
• Align your financial statements with your tax returns, or be ready to explain every difference.
• Count inventory and write off what is obsolete.

Our guide to small business valuation explains which add-backs hold up.

Months 3 to 6: reduce owner dependence

The single biggest discount buyers apply is for a business that only works because the owner does.

• Promote or hire a second-in-command and hand them real responsibility.
• Write down what lives in your head: pricing rules, recipes or formulas, quoting methods, key supplier terms, seasonal calendars.
• Introduce your top customers to the people who will serve them next.
• Move from paper and memory to systems. Scheduling, quoting, inventory and billing in software everyone can use. AI tools can speed up documentation and routine work; see practical AI for owner-run businesses.
• Take two weeks off in month six. Whatever breaks is your next priority.

Months 4 to 7: fix what diligence will find

Buyers will look at the same list every time. Get ahead of it.

• Contracts. Customer agreements, supplier agreements, and whether any of them require consent to assign to a new owner.
• Lease. Remaining term, renewal options, and whether the landlord must approve a sale. If the lease is short, negotiate an extension now, while you are not under deadline.
• Licenses and permits in good standing, in the right entity's name. In regulated industries like food and dental, this list is longer. Food businesses can use our food manufacturer diligence checklist.
• Employment. Written job descriptions, I-9s on file, contractor classifications reviewed, pay practices compliant.
• Entity records. Confirm your company is in good standing with the Nebraska Secretary of State (or your state), with annual reports filed and ownership records current.
• Intellectual property. Trademarks registered and owned by the company, domain names and social media accounts in the company's name.
• Deferred maintenance. Fix what a buyer will see on a plant tour.

Months 6 to 8: get a realistic value and plan the structure

Get a value range based on your cleaned-up numbers. If the buyer will use SBA financing, an independent appraisal will set the ceiling the loan can fund. If your expectations are well above a supportable range, decide now whether to wait and grow earnings, or to accept a structure with more contingent pieces.

Decide what you are willing to accept on structure: a seller note and on what terms, an earnout or not, rollover equity, and your consulting role. Our guide to seller notes, earnouts and rollover equity walks through each.

Months 7 to 9: build the data room

Put everything a buyer will ask for in one organized, secure place:

• Three years of financial statements and tax returns, plus year-to-date
• Monthly P&Ls for the trailing 24 months
• Add-back schedule with support
• Customer list with revenue by customer (shared later in the process)
• Employee roster with roles, tenure and pay (anonymized at first)
• Lease, major contracts, licenses and permits
• Equipment list and maintenance records
• Organizational chart and key process documents

A well-organized data room shortens diligence by weeks and signals that the business is well run.

Months 9 to 12: go to market

• Choose your path: a targeted process run by an advisor, direct conversations with a short list of buyers, or both.
• Qualify buyers before sharing details. Ask how they will finance the purchase and who must approve it.
• Use a mutual NDA and release information in stages.
• Compare offers on cash at closing, terms, certainty and fit, not only on headline price.
• Keep running the business. The most common way to lose value during a sale is to let performance slip while you are distracted by it.

Months 12 and beyond: diligence, closing and transition

Expect 60 to 120 days from a signed letter of intent to closing for a prepared business. Then the transition starts. A good buyer will have a plan for the first 100 days; ask to see it. Ours is in the first 100 days after closing.

A quick readiness score

Give yourself one point for each:

1. Monthly books tie to the bank.
2. Every add-back is documented.
3. Someone else can run the business for two weeks.
4. No customer is more than 20% of revenue.
5. Your lease runs at least five years or has renewal options.
6. Key processes are written down.
7. Licenses, permits and entity filings are current.
8. You know the after-tax number you need.

Seven or eight: you are ready to talk to buyers. Four or fewer: use this plan first.

Talk to Twelve31 early

Twelve31 partners with established businesses in the Omaha region, generally with about $1 million to $3 million in revenue and a history of profit, often when the owner is planning succession or retirement. We keep the name and the people who make the business work. The earlier we talk, the more options you have. Tell us about your business. It is confidential and carries no obligation.

If your business is not a fit for what we buy, Twelve31 Advisors runs focused sale processes to a curated set of qualified buyers, each approached directly and in confidence.