If you are considering selling your business, you obviously want to get the most money for it. But don’t want to wait until it’s too late to begin thinking about this process – it’s a process that typically takes years. Here are five ways to begin.
- Demonstrate Profitability
The first thing a buyer will look at is your business’s profitability and the cash flow that the business produces to its owner. A business that can make a profit easily and quickly will obviously be of more value than a business that cannot. Do what you can to increase profit margins and document this growth – although be careful not to sacrifice the long term health of the business in favor of short term profitability.
- Establish Recurring Sales Agreements
A potential buyer will want to see sales numbers, and ideally, some indication that those figures will continue. So look for ways to create recurring revenue. A buyer will want to know they can expect consistent revenue immediately, and a recurring sales contract will demonstrate this and will give them more reason for confidence.
- Create Seamless and Effective Processes
Your potential buyer will need to know how your business runs. Specifically, he or she will need to be able to run the business without your help after closing. So make necessary upgrades, document processes and procedures, and create systems for the things the business does. This makes transitioning the business to a new owner easier and, therefore, increases the value of the business in the purchase price.
- Keep Your Essential Employees Happy
One of the toughest parts of buying a new business is the need to replace employees. If your key and essential employees are willing to stay with your business after it is sold, that is an excellent benefit to the new buyer (sometimes, it’s even required for the deal to close). Training new employees is costly and time-consuming, and turnover is always a concern. If you have a essential staff, offer incentives for them to stay when the business changes hands.
- Make Sure Your Business Looks Its Best
Just as you would fix up a house before selling it, you want to do the same with your business. However, instead of a fresh coat of paint, you will want to make sure your financial statements are tidied up, all of your documents and agreements are well-organized for inspection, and your policies, procedures, and systems are documented.
When making the decision to sell your business, the earlier you start planning, the better. If selling is on your mind, you should seek the counsel of an experienced business attorney who can help you devise a plan that will help you maximize the value of your business and make the process as easy as possible. Contact us today to learn more!