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.
5) Systematize and Document Your Business Operations
Reviewing, improving and documenting your internal operations and systems will improve the salability of the business while also likely improving its profitability and value.
6) Identifying Assets
Asset identification is a necessary step to preparing your business for sale and can provide monetary benefits as well.
7) Writing the Buyer's Business Plan
This is the “sizzle on the steak” that significantly aids salability and can improve value.
8) Housekeeping
“First impressions are lasting impressions” says it all.
Over the next 8 issues of this newsletter series, we will delve deeper into each of the steps you should take to increase the value of your business.
"Spectacular achievement is always preceded by spectacular preparation." Robert H. Schuller
Overcome the Power of Inertia
Overcome the Power of Inertia and call a business broker for a free consultation. Many brokers offer no-charge, no-obligation evaluations of small businesses. They can provide a broker opinion of value and help you identify obstacles to a successful sale as well as opportunities for improvement to increase the value of your business. That is a great way to start planning for a successful and profitable exit from your business.
