Posted 12-26-2014 8:53 am by
Are you planning on selling your business in 2015? Many business owners set their business goals when they make their New Year’s resolutions at the beginning of the year. If selling your business is a move you are considering, here are some suggested goals for you in 2015 that will help maximize the sale price of your business.
Goal #1: Find out the current value of your business. According to BizEquity, approximately 75% of small business owners do not know how much their business is worth. One of the first steps to planning a successful sale is to get an idea of how much your business is currently worth. Your local business broker can often provide you with a complimentary market opinion on the value of your business, and educate you on the state of the local business sales market. If you want a formal valuation report, your local business broker can often produce one for a modest cost. At Advantage Commercial Brokers, our formal valuation report is over 20 pages long, and details the asset value, equity value, enterprise value, and liquidation value of your business along with an explanation of the valuation methodologies.
Goal #2: Increase (or at least maintain) your revenues. One of the most common mistakes business sellers make is losing steam or interest in the business, resulting in a drop in revenues right before the business sale. The sudden drop in revenues can hurt the value of your business, or worst yet, scare away potential buyers altogether. Remember, buyers are willing to pay the most for your business when revenues are trending up, not down. If you are planning to sell your business in 2015, one of the most important goals you can set is to increase, or at least maintain, your revenues.
Goal #3: Be meticulous with your bookkeeping. It is essential to have super organized books and records if you want to maximize the sale price of your business. Sooner or later, business buyers are going to examine your books. Nothing frustrates or turns away potential buyers more than questionable records do. Think about it from the buyer’s perspective. If you were the one looking to buy a business, would you risk your hard-earned savings buying a business that can’t accurately show its income, expenses, assets, and liabilities?
Goal #4: Organize your customer database. Most business buyers would like to not only continue your current operations, but also to grow the revenues. Marketing is an essential task to increase sales, and buyers will be looking closely at your customer database. Do you track who comes into your store? Do you have a well maintained customer database with names, addresses, e-mails, and phone numbers that the new owner can send promotions to? Better yet, do you know the demographics makeup of your existing customers so the new owner can find more customers that fit this demographics profile?
Goal #5: Start the planning early. Too many business sellers only consider selling when they feel desperate or want out of their business. With some advanced planning, you can craft an exit strategy that is gracious, profitable, and satisfying. Start talking with your advisors now. Meet with your CPA to find out the tax consequences of a business sale. Get educated on the business sales process. Interview business brokers to find one you are comfortable working with. You don’t have to put your business on the market right away, but starting the planning process early will allow you the best chances of success to produce a profitable and gratifying sale.
Aaron Muller is a business broker in Washington State who has sold over 120 companies and facilitated over 40 SBA loans for his clients. Contact Aaron at (425) 766-3940 to inquire about selling your business.