Professional Advisors
The help of professional advisors, such as Jeff at Business Broker Colorado, a CPA, tax and transaction attorney, financial planners, and more, can be of enormous benefit to the seller, and can help the owner prepare their company to maximize its value when it comes time to sell. Working with a team of trusted professionals can help make the preparation and transfer of ownership easier, on more favorable terms, and help generate a higher sales price for the owner.
Accurate Financials
If you’re looking to obtain the maximum amount of your sale proceeds in the form of cash, it’s important to make your business financeable. This can best be accomplished by having your records accurately reflect your company’s income, expenses, and more. The best way to do this is through a CPA. We recommend a detailed financial tracking system like QuickBooks combined with compiled financials by a CPA.
Keep the Sale Top of Mind
Don’t move the business; buy equipment/assets to save money on taxes, turnover key employees, etc., right before trying to sell your business. One good tip is to lease large assets like vehicles within two years of putting your business up for sale instead of buying it because Jeff can get a buyer to take over a lease but if it is owned by the company, it will have to stay with the company and be paid off at the closing.
Thinking in terms of every dollar you make in the year before the sale is really like making an extra 3 or more dollars on each dollar, which should serve as a lot of extra motivation. Focus on profits and not just revenues. Raise prices, if possible, the year before the sale, and get rid of unnecessary expenses. Don’t keep any checks on your desk, turning over a new year and invoice all that you can before the year’s end. Pay bonuses in the new year if possible, and make sure your work is contracted, even if it is an old customer that you trust. Don’t start slowing down before you sell; keep your foot on the gas. Add employees if it increases sales because your recent trend will help to determine your multiple on earnings (the sales price) of your business.
An Effective Staff
You’ve worked extremely hard to build your business, though you need to ensure that the right employees are in place to manage a successful ownership transfer once the deal is finalized. Your company may be more valuable if it is your staff, not you, that is the driving force behind a majority of your company’s successful sales and operations.
Burnout
Don’t wait to sell your business until you have slowed down or start losing interest. A Businesses ‘Trend’ is an important part of the valuation process. Most buyers and banks use a three-year time weighed approach to value your business and don’t care how your business was doing four plus years ago. A positive trend will not only get you more money but a much higher probability that it sells.