Maximize the Value of your Business

We all know that the time when you need to sell your business will potentially come. This may be triggered by your retirement or other personal considerations. With this, for sure you will want to price your business at the highest rate possible. In order to do so, business owners might have to consider doing the following actions:

  • Plan ahead

Buyers usually look at the business’ longevity in terms of income generation.  The profit dictates the value of the business. That means, when profit is high, selling price can be set a high amount as well. Business owners put their focus on more sales and margins. But overhead costs, if they are too high might eat up the gross amount. Expenses on use of utilities, insurances, lease, and on services availed might need to be lowered down. Review your ledger and take a look at the items that you can still manage. Maybe you can look for better plans for your internet and phone usage, look for suppliers that can provide low-cost but quality raw materials, reduce the usage of electricity if not needed, increase your purchase volume and decrease your purchase frequency, and the like.  Your initial agreements with your suppliers might have worked before but may need some adjustments in order for you to save more.

If your cash on hand is already allocated for the expenses, there might be a slim chance for the business to grow. Overhead costs managed properly can lead to optimal profits, and eventually optimal business value.

  • Assign key tasks among the staff members

The business can be considered more sellable if the operations do not rely solely on the owner. He/ she must maximize his/ her staff through training and entrust crucial operational assignments.

  • Establish a wide customer base

Buyers are attracted to businesses with a long list of loyal clients. This means that the business is expected to operate normally and still generate the expected income despite the transition in the ownership.

  • Come up with a growth plan

Once the buyer sees that the business still has a potential to grow through your growth plans for the business (i.e. expanding in terms of geographical coverage, tapping other potential target market), he/ she will be more convinced to engage in the business of sale.

  • Keep at least three years of accurate financial documents

Financial statements refer to the income statements, balance sheets, and documents reflecting the tax returns. All expenses must be declared as well.

  • Settle bad debts, get rid of dysfunctional equipment, deplete the balance inventory, and lower down your liabilities.
  • Take hold of your contracts with customers and suppliers.

Buyers might ask for details reflected in these documents.

  • Seek the help of professionals like accountants and brokers, and online marketplaces that can help in the financial and marketing aspects of the whole business for sale.

Businesses for sale found on prints and on websites pretty sure considered everything mentioned above before taking the leap. You, too should follow the take note of the key points once you plan to put your business on sale.

Post Author: admin