Are you a business owner thinking about selling your company? If so, you should position your business to get the highest price. The selling of a business is a task that cannot be completed over night. After all, did you build your company in one night?
Having realistic expectations is just the first basic step in understanding the entire selling process. To become comfortable with the situation, it’s good to know that the transaction typically takes the majority of business owners six months to a year to sell their company. In the meantime, several steps you can take will assist you in getting the highest offer for your business.
From the BUSINESS HOUSE, inc.SM the following Business Basics 101 tips will help you obtain the best and highest price for your company.
1. Develop a Proprietary Exit Plan with a Certified Professional
An Exit Plan is a complete and comprehensive document that helps guide the decision-making process and addresses how a business owner will make crucial decisions to successfully facilitate the transition of leaving or exiting their business. Hiring a certified Exit Planner is by far one of the most important factors when it comes to selling your company. A Seller will need guidance from a highly skilled and proficient Exit Planner to assist them with this emotional transition. An Exit Planner is an important professional to have on your team of Trusted Advisors, as they can help alleviate the stress of selling your business.
2. Make Sure Your Business is not Fully Dependent on You
First, evaluate your position in the company. Where do you stand? Can your company run without you? Staffing is one of the first things Buyers look at when purchasing a business. You need to have an appropriate and adequate level of staff members, including a strong management team. Effective management personnel are the key component in your daily business operations for meeting company goals.
3. Maintain Accurate Books, Records, and Financials
Making sure your financial statements are in order and are easy to read is not only a good practice, but also makes your business more appealing to Buyers. A good rule of thumb is to have a minimum of 3-5 years of tax returns, financial statements, and payroll history. Items on this checklist are fundamentals of a successful business and can ultimately result in your company’s selling price.
4. Perform General Housekeeping
While appearances aren’t everything, it is a vital factor that influences a Buyer’s decision. As a Seller, you do not want to present your company to a potential Buyer with the facility in disarray. It is imperative to always display a clean and well organized business. All areas including warehouse, production areas, machinery, equipment, and office spaces need to be clutter-free. The owner’s pride in maintaining the ascetics of the business in general, will reflect on how other segments of the business are managed.
5. Maintain Your Company’s Goals While Focusing on Increasing Your Profits
To know and identify your firm’s strengths and weaknesses allows you to concentrate on improving those specific areas. Managing yourself and your employees will permit you to keep your eyes open to areas that may need improving. Your main concern is profit. Sellers need to increase sales, decrease spending, and increase profits. Focus on areas that add value to your business. If you can prove to a Buyer that your business has increased revenues and show profitability, this will help you maximize the dollar amount paid for your company.
6. Obtain a Business Valuation
Most Brokers would agree that a thorough valuation of a business is by far one of the most important factors in establishing a fair value for your company. In fact, it is very difficult for a business owner to value his own company and obtain a fair and reasonable asking price. Having a third party business professional perform a business analysis takes out all bias views and truly establishes the best and highest asking price. Indeed, hiring a certified Business Appraiser provides more creditability to the Buyer regarding your selling price.
7. Meet with Your Team of Trusted Advisors
A meeting with your Business Broker, Exit Planner, Attorney, Accountant, and other crucial team members will play a huge role in gathering and preparing all necessary documents for your Broker. Your team of Trusted Advisors also needs time for preparation so they can effectively plan to assist you in the transaction. Furthermore, it is imperative that you introduce your team to your new Business Broker, so that they will all have the same purpose and goals, which is to sell your business for the best and highest asking price.