A little thought and planning now, will increase the value of your business and make it financeable by a bank.
- Most important step – Have accurate financial records. If you do not use QuickBooks or have a service that prepares you financial statements, invest a hundred dollars and start using QuickBooks. A tax return will typically not be sufficient on its own. QuickBooks is easy to set-up, then use it in the simplest form like a checkbook register. Record 100% of sales, minimize non-business expenses (eliminating them is best), and showing as much net profit (owner benefit) as possible. If you are not starting a fresh year with Quick Books, go back to the first of the year and change non-business expenses to “distributions” which will take the expenses off the P&L and increase the net profit.
- Decrease the business dependence on YOU – Having YOU as the face of business will reduce the value of the business. You want your employees to be the Face of the business, as many of them as possible, so a new owner can more easily take your place.
- Keep growing – One of the worst things you can do is take your foot off the gas with respect to growing sales. One of the key factors of valuing the business is the sales and profit trend. From a bank’s perspective, it is the same key question. Where is the bottom with declining sales? An increasing sales trend is essential if you want to get top dollar for your business and not have to offer seller financing because bank financing is not available.
- No customer concentration – If you have one or more customers that represent more than 10% of total sales, you have a challenge. There may be ways to sidestep this, call Bob and discuss the alternatives of presenting the situation or changing the situation.
- Develop an Exit Strategy – Start now, even if you don’t plan to sell for another one to three years. Bob Dolan is a licensed Real Estate Broker and has over 45-years of experience selling businesses, particularly as a leader in the market place of selling businesses with gross revenue in the $2 million to $26 million range. On a highly confidential basis, Bob will value your business and help you develop a transition plan that maximizes your financial gain and simplifies the process of selling your business while maintaining total confidentiality.