| Leading financial researchers report that
75 percent of U.S. businesses do not sell. It dismays me to see entrepreneurs receiving so
little in return for all their years of hard work. Or, having to shut their doors with no
buyers in sight.
It's even more disappointing, since businesses can easily
take steps to achieve maximum perceived value for a potential buyer. It just takes a
little planning, know-how and application to take a $100,000 a year profit generating
business and sell it for either $200,000 or for over a million bucks?
Do the math! Multiply your profits by two and by ten.
That's the range that you can sell your business for when
you follow advice I give to MaximizeYourExit.com clients including these seven steps to
maximum profit.
My Top 7 Ways to Maximize Your Exit Strategy Now &
Sell Your Business For Maximum Profit
When it's time to sell, you must ask an all-important
question: "What am I doing to increase the asset value of my business?" To
prepare for your sale, start with these pointers:
1. Quantify Your Business Value
No one will price your business without knowing its exact
worth. You need to identify which assets to include or exclude from the sale. You also
have to list your risks. Then you'll have a better idea of the value of your business. It
may not be worth as much as you'd like, but now you have a realistic idea about price
expectations and goals to meet.
2. Eliminate Worthless Inventory and Debtors
No one wants a business with out-of-date stock. So, get rid
of it. Same with long-term non-payers. Make them an offer they can't refuse or write them
off. Both outdated inventory and debtors weigh down a sale.
3. Straighten Financial Records
Buyers want the facts, and they will be asking scores of
financial questions. You must be prepared to answer everything and anything about the
reporting end of your business. This includes balance sheets, assets and liabilities and
the taxation position. All clean and ready to view.
4. Audit Your Books
More specifically, your CPA needs to audit your business
records to include extensive verification, confirmation, and performance. An evaluation of
internal controls can be considerable help to both you and the buyers.
5. Strengthen Legal and Contractual Affairs
Buyers will also have many legal questions. What is the
ownership and structure of your business? Have you been compliant with the regulations for
your particular business? What contracts do you have with customers and vendors? What is
their status? What is outstanding?
6. Install and Improve Systems
Owners are the main source for daily operations.
Unfortunately, such details are often only stored in their brains. A big plus is writing
up department manuals. These how-to's do not have to be long and complicated. You need
just enough to cover the basics and relieve your potential buyers' anxieties about your
absence. You can also use videos using software like Camtasia.
7. Prepare Your Management Team
Even better than the written manuals is having someone in
place who can personally answer questions. In larger firms, the buyer wants to know what
manager(s) will help with the transition. Who will be the knowledge bank? How long will
this source(s) be staying?
This is one of the most critical times in your life. It's
essential to be prepared and ready for any prospect who may come through your door.
The seven steps described above is just the beginning. It's
a start in the right path toward higher profits. If you want to sell your business for
maximum profit, then you need to start planning your exit strategy now. |
