If you are thinking about selling your business in the short term, there are some areas you can improve now that will increase the value of your company to potential buyers. Here are four of the most common things a business owner can do right away.
1) Increase your reported profit and cash flow.
A buyer will probably need a loan for the purchase of your business and will need your current earnings to justify the loan. Also, the price a buyer will pay is usually directly tied to the profitability of your company.
Account for Profitability:
You will need to account for profitability that is paid in the form of benefits to you. This is not a problem.
Increase Your Cash Flow:
However, you can probably increase your cash flow by tightening control of your expenses and increasing advertising or promotions.
Identify Short Term Efficiencies:
Consider hiring a CPA or other business professional to scour your books and operations for short term efficiencies.
2) Put your business on auto pilot.
Buyers want to purchase an income with the confidence that they can continue, or improve, the income stream of the previous owner. They place higher value on businesses that can run themselves. Increase the value of your business by making sure that your key employees can run the day-to-day business.
3) Put your house in order.
Potential Buyers don’t want to buy a mess. If your company has disputes, overdue receivables, an uncertain lease, poor accounting records, employee turnover, out-of-date stock…., clean it up. Buyers will pay more attention to your company and make better offers if they have confidence in the company they see.
4) Seek assistance in preparing your business for a profitable sale.
Our Sunbelt office in Charlotte is the oldest Sunbelt franchise in the United States and one of the largest in the southeast. We have between 50 and 100 businesses for sale at any time. We would be pleased to assist you in selling your company. .
3) Action Items
- List one way you can increase profitability.
- List two ways you can increase cash flow.
- What are three short term efficiencies?
- How can you automate your business so it runs without you?
- Begin tracking line items from this document.