|
“STAY READY”
The small business industry is ever changing with each business collecting new owners on an average of every five years. If you have owned your business for what seems to be forever, have just started a business or you are a new buyer “Stay Ready.” The time to sell may be much closer than you think.
The reason to sell a business goes from; you are ready to cash in on your years of success to bailing out of a sinking ship with over a hundred other good and bad reasons in between.
Starting today, “Stay Ready” to sell your business; your business decisions today will affect your revenues and profits and ultimately your sales price down the road and it will make you money getting there.
The following are a few tips on Staying Ready:
1. Maintain accurate accounting and records:
This is a must to sell your business at its true value. Accurate accounting will usually shorten the selling time for a business and produce the highest offers in comparison to the listing price. Poor accounting and records are usually the reason deals do not consummate. You need three years of well maintained accounting and records or accounting and records from day one if in business less than three years. “Stay Ready”
2. An issue now will be an issue later:
If you are concerned about something that may be effecting your busines today, fix it. It will be an issue when you sell and in most cases will cost you more in an offer to buy than it would to fix it now. Plus you will benefit from your actions until you elect to sell your business. “Stay Ready”
3. Income-Income-Income:
“Report It” If your business makes 100k per year and you report 50k per year, 50k is the amount verified for your valuation. That will average out to about 150k in lost value when pricing your business.
Three reasons to avoid this temptation:
a. Would you take a sellers word that he/she made 50k more than reported?
b. Tell your lender that 50k was earned but not reported.(If you are foolish enough to believe #1 you most likely no loner have a lender) Financing is based on CASH FLOW and this deal no longer has the documents to prove the true cash flow so ultimately no financing.
c. There also is an agency called the IRS who could become very interested. “Stay Ready”
So, “Stay Ready” and report accurate sales and profits. It will usually cost you more at the time of sale than you made over the past years by under reporting.
4. Prepare Your Replacement:
Can anyone run your business? What happens if you become ill or injured? Do
you have systems in place for someone to step in and successfully operate
your business? New buyers may not have your experience and will be
concerned if the systems are not in place to provide them assurance to
continue your success. “Stay Ready”
If you operate your business like you are selling it tomorrow you will be continually improving your business. Down the road when you elect to sell your business the benefits will be very gratifying.
Owning a business is a dream. No mater the type of business you own or elect to own your successes is in your hands. So put yourself in a position to be your own Boss and always “Stay Ready”
|