During the process of selling your business, it is only natural to want to maximise the amount that you receive.
Thousands of hours of hard work will have gone into building your brand and establishing a solid financial foundation, and it would be foolish to receive less money than you deserve simply through the lack of a little advance planning.
If you think carefully about the points listed below, you could increase the value of your business by a significant amount.
The need to make sure that your financial and administrative records are in good order may seem almost too obvious to mention. Nevertheless, hundreds of business owners trying to sell their business each year neglect this very simple task, and come to regret it as otherwise enthusiastic buyers lose interest on discovering the amount of organisational work they will have to do.
Make sure that your figures are accurate and simply presented, and make it easy for a prospective buyer to perform due diligence on your business. You will immediately improve your chances of receiving a good offer, and will build a relationship of trust that will serve you well throughout the sale process.
The first thing that any sensible prospective buyer will look at when assessing the value of your business is the state of its cashflow. The size of your reserves and the assets you own are simply not important if you do not have the revenue coming in to support the cost of the business.
Even rich buyers do not want to purchase a loss-leading business if they can avoid it. For that reason, in the year running up to any sale, do your level best to both diversify and solidify your revenue streams. A number of different recurring sources of income, guaranteed by contract, will significantly boost the value of your business.
This is best achieved through a strategy of focusing on your customers, and generating repeat business. Luckily, this is what every successful business should be doing in any event, sale or not!
Next to your cashflow, the assets of your business are likely to be the resource which most buyers will examine closely for hidden value. You are unlikely to want to burden the business with an unnecessary physical asset base simply on the possibility of a sale, but you should think carefully about enhancing your intangible assets.
One of the most important of these is the skill and commitment of your staff. If you can point to a dedicated core of staff who will stay with the business after the sale, the value of the company will rocket. If you are willing to stay 'on the books' for a couple of months to ease the transition, then even better.
The three measures above can all be discerned by a prospective buyer on their own. Where you can add the personal touch, however, is in your sales pitch to anyone who is really interested.
Do your thinking before meeting with a buyer, and come up with the unique selling point of your business. What is its strategic place in the market? Why is it better positioned than its competitors to succeed? What barriers to entry exist which would make it difficult for the buyer to start his own business from scratch?
If you really want to add value to your business, sell the strategy of your company. A discerning buyer will pay significantly more for a company that has potential for growth.
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