Here are a few more items to keep in mind that might be helpful in when considering selling your business:
Buyers Want Cash Flow
The first thing to keep in mind is that the vast majority of buyers want to buy cash flow. Sit down with your accountant or bookkeeper and begin to get your financial statements in order with cash flow the order of business. Cash flow is not the same thing as profit. Most buyers look at the profit and loss statement or tax return, and look at owners or family compensation. They will consider any excess compensation to employees and family members. Buyers will also look at large one-time expenses such as a new computer system, or remodeling. They will consider non-cash items like depreciation and amortization. Interest expenses will be reviewed, as will owner perquisites. These are items that a professional business broker considers when advising a selling client on a suggested selling price.
Appearances Do Count
The time to replace that old worn-out piece of equipment is before you decide to sell. Don't assume that a new owner will want to do it or that the price will be slightly lower because you haven't replaced it. The time to "spiff up" the business is now, even if you aren't selling. Fix the sign, replace the carpet, paint the place - make it look good. Even if you're not selling, it's just plain good for business, and you never know when the time to sell occurs. Keep-in-mind that anything that increases sales also increases profits and the all-important cash flow!
Everything has Value
There are other things that add value to your business. Don't discount the value of customer lists, proprietary products and/or techniques, well-maintained equipment, secret recipes, customized software programs, or good employees. These are termed "off-balance sheet items," and although not used in most pricing models, they add to value. Look at your business very carefully so you don't overlook those items that make your business more attractive to the buyer.
Eliminate the Surprises
Long before you put your business on the market -- eliminate the surprises! Review every facet of the business and remedy any problems that could appear during the sale process. No one likes surprises -- most of all potential buyers. Whether legal, accounting, environmental, or anything else - solve it now.
Another Insider Tip
This may sound like something that should have been done when the business first started so it may be "after-the-fact. You should create an operations manual. You may already have one, or began one years ago, or perhaps, have thought of doing one, but now is the time. It may actually create added value to the business. Even, if it doesn't, it will impress buyers that you have the business "act" together, and should help you sell more quickly and effectively. Preparing a manual on how to operate your business can also be helpful even if you don't want to sell. It doesn't have to be elaborate, just cover the basics. A collection of ads that you have placed, a catalog of or sample of products, publications, etc, or menus (if the business is food related) is also impressive. Anything to do with the business that might be helpful for a new owner. You don't want to include anything that is proprietary such as customer lists, suppliers or secret recipes, etc.
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