GETTING READY TO SELL A BUSINESS
If you’ve given some thought to selling your business, there are some things that you can do in the short to medium term to improve the value of your business for a sale sometime down the road.
Savvy buyers know what to look for and will pay more for a business that’s clean and neat and has good records. Here are some things you can think about to help improve the value of your business.
Keep Good Records - Businesses are valued on performance. Your “Net Income” must be accurate and verifiable. A buyer will be banking on it. If you structure your bookkeeping to minimize or avoid taxes, it may reduce the ultimate value of your business. Take steps now to improve your bottom line just by cleaning up your books. The more net income, the higher the selling price, period! Every dollar you can add to revenue or deduct from expenses goes to the bottom line.
Lease Review – When is your lease up? Is it assignable? Is there a chance to negotiate better terms? A discussion of what a buyer may want in a lease will be relevant to the value of the deal to them. It may also be a hindrance to a sale. Hopefully you are on good terms with your landlord.
Straighten Up - Give your business a pretty face. No business is harder to sell than one that looks and is run down. Make sure that your inventory and equipment are up to date and in good repair. Make sure your premises are neat and orderly and that the environment is clean and attractively presented.
Get Aggressive - A business that is expanding sales is more valuable than those with declining sales. So before you actively pursue selling your business, reinvigorate your marketing. Try to show a little increase in sales every quarter. If a potential buyer sees a business that is still growing, he will be willing to pay more for it because he perceives greater inherent value.