Is it time to sell the farm? Are you bored and uninspired running your business? May just tired of being a slave to the business you created? Has age or poor health caught up on you and you’re not delivering the goods like a decade earlier? Whatever the reason(s), when it is time to sell make sure you’ve aligned your ducks properly prior to sticking that ‘for sale’ on the front door. Here are a few things to contemplate about preparing for the process.
Get Ready to Sell at Your Ribbon Cutting.
Not literally of course, but you should start creating credible, provable value in your business from day one. This means you don’t ask your second cousin who spent two years in the pokey for counterfeiting to scribble down your P&Ls on the back of a cereal box. Keep meticulous books, establish a working partnership with a community bank and hire a CPA to prepare your annual taxes based on those aforementioned meticulously maintained books. Not only will this approach place you in position to sell your business more quickly and at higher value, you’ll have a lot less sleepless nights than the business owner who doesn’t heed this advice.
Answering the Door When the Tax Man Knocketh.
Yep, back to the CPA recommendation. It may seem, at times, an additional expense your fledgling or struggling business cannot absorb. Find a way though, as nothing will convince a prospective purchaser that your numbers are legit and your business is real more than CPA prepared tax returns. End of story.
Hidin’ Your Stash of Cash from Uncle Sugar.
Your relationships with state and federal taxing authorities are yours and yours alone to define. Keep in mind though, if you’re inclined to stuff your pockets with the green stuff as an income tax reduction strategy, it will negatively impact your business valuation. Sure, you can nod and wink at your business’ prospective purchaser as you intimate you’re pullin’ out gobs of cash from the drawer every night. But see if they pay you for it when they make their offer. So go ahead a work a little sleight of hand on your Uncle Sugar. You may feel clever avoiding some income tax, but you’ll pay a price later when you’re ready to sell. Oh, and by the way, it’s illegal.
The Right Broker – the Right Valuation
Yeah we know your Mom’s Bridge partner just got her real estate license. And before this she worked as a billing clerk at the electric company. A noble profession certainly, but is this really the type of background that will prepare someone to place a saleable value on and successfully represent the sale of your business? NO! C’mon folks you don’t see a proctologist when you need eye surgery (I think that’s actually a set up for an old joke I heard once, but that’s for another day.) Take the time to find the right professional to represent your sale. An individual who has specific experience, specialized training or who simply ‘really gets it’.
Inventory, Cash Flow, Goodwill, Trade Name, FF& E … What are We Really Sellin’ Anyway?
There are lots of aspects to your business. You have cash flow and annual profits, you have a valuable customer list, you have your community reputation and the repeat business this generates and you may have an inventory saleable items or parts. And then there are the desks, chairs, lamps, machinery, vehicles, computers, phones and on and on with all the stuff you need and use to make, do or run your business commonly referred to as FF&E or furniture, fixtures and equipment. When you’re ready to go, sit down and think through these different aspects of your business thoroughly and really determine and define just what it is that you’re selling.
Then find a good Broker.