Getting a business ready for sale is both advisable and prudent. Waking up one day and deciding you want to sell your business tomorrow may not be a good idea. Deciding that you would like to sell your business as an exit strategy and putting together a plan is likely to maximize your gain from the sale of your business.
You could easily Google “preparing your business for sale” and find many, many articles/list and sources of information. I had written a related article in the past, as well. But beyond the list – what of these methods are most important? Are all of these measures necessary or are they just guidelines?
I had sold my own business of 20 years, I had entertained several offers over the years, I went thru various stages of decisions as to how I would exit my business. At some point I realized that my exit strategy would be to sell my business if I could find the right situation. But from my perspective the most important part of my approach was to commit to running my business as if I would own it perpetually. So many businesses that try to sell – don’t sell. A business owner needs to realize this and allow this fact to influence their thought process. Currently, I am a business broker in Florida and work with Florida small business owners with the process of buying and selling a business.
Many components and aspects of your business should be looked at from a realistic standpoint, critiqued, and adjusted as needed when preparing your business for an eventual sale. Some important areas to address when looking to sell your business include:
- Either develop, establish, or refine your business operational procedures, practices, and methodologies and have them documented
- Does your business rely on you the business owner? If so, make changes to reduce that reliance.
- Clean financials – Does your Income Statement and Balance Sheet make sense?
But the question to pose is what of these measures is most important or essential as it relates to preparing for the sale of my business?
In my opinion, it is accurate, sensible, reliable financial records.
Typical financials involved with the sale of you business can include Profit/Loss or Income Statements, Balance Sheets and Tax Records. Further into the due diligence process of your business good Sales Journals, Customer Information, Inventory Info, all can go a long way to maximizing the value of your business. Clean financial records are so essential to all parties involved with the acquisition of a business. And all involved includes the Seller, the buyer, and possibly a bank, lender or third party investor.
So, when you are looking to sell your business, prepare your financial records properly.
If you have a great business that is producing great margins, produces a great bottom line, and a very high owner benefit- but the financial records do not support this – what do you have?
If you have a business that you own and run it semi-absentee, great systems, increasing sales, good industry but poor financial records- what do you have?
If you have the nicest looking, shiniest looking store, website, equipment, office or vehicles, but your financial records don’t make sense- what do you have?
Looking to sell your business next year? Start working on your financial records today.