Preparing to Sell Your Business - 8 Steps to Increase Value
In the last issue (#30), we discussed How to Start Overcoming Obstacles to a Business Sale. This issue will discuss Preparing to Sell Your Business – 8 Steps to Increase Value.
" I think there is something, more important than believing: Action! The world is full of dreamers, there aren't enough who will move ahead and begin to take concrete steps to actualize their vision." W. Clement Stone
Preparing to Sell Your Business - 8 Steps to Increase Value
Throughout this newsletter series, we have noted that only about 20 – 25% of businesses ever sell. The key to having a saleable business is advance planning (hopefully, at least 3 – 5 years in advance). However, in addition to assuring salability, you can actually increase the value of your business – sometimes substantially – by properly preparing your business for sale.
Following are 8 steps you should take to increase the value of your business:
1) Planning Considerations
To begin the process of preparing your business for sale, you need to establish your personal goals and be knowledgeable about your current financial situation.
2) Minimizing Buyers' Risk
As briefly discussed in the last newsletter, once a buyer makes an offer on a business, the primary motivation becomes risk minimization. Prior to making the decision to sell, there are numerous things you can accomplish to minimize buyers’ risks.
3) Improving Accounting Procedures
Changes to some of your accounting practices and financial reporting can improve the value of your business.
4) Improving Profitability
Depending on your business, every $1.00 of increased profitability through increased sales, increased gross margins or reductions in expenses can result in $2.00 – $4.00 of increased business value.
