Selling a Business

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Valuing a Business

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Archive for Existing Business

Jun
09

Ways Of Adding Value To Your Business

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>> 4 Ways Of Adding Value To Your Business For Sale

Are you planning of selling your business? For you to sell the business at a higher price you need to increase its value. To help you out here are some of the ways in which you can increase the value of your business:

1. Increase Profit and Cash Flow

It’s common for business buyers to want to secure business loans using the businesses that they have bought. This means that if your business isn’t profitable enough or the cash flow isn’t adequate, no buyer will be interested in it.

To make your business more attractive you should hire a knowledgeable person from outside to balance your books of accounts and identify any mishaps that might be there. Great people that you should hire are those that have CFO or CPA qualifications.

2. Maintain the Key Employees into the Business

Skilled and highly experienced employees are of great value to a business. To make your business valuable you should ensure that all the key employees of the business are comfortable and ready to continue working for the company even after your exit.

The key employees include managers and supervisors. One of the most effective ways of ensuring that these employees don’t exit is to give them great packages and productive working environment.

3. Renovate the Business Premises

Although, your business can seem very attractive on paper, a potential buyer might shy away from buying it if the premises aren’t pleasing to look at. The best way of going about it is renovating the premises. This calls for you to paint the premises with attractive colors. You should also replace the floor. When it comes to furniture, you should make new purchases.

4. Create Systems

There is no one who likes doing the hard work; therefore, you should create systems that ensure that the business can run itself even when you are not around. The best way of going about it is regularly taking breaks from the business and see if the people entrusted with given areas are able to execute everything without any problems.

A business that can run itself is very attractive to buyers as they are sure that they don’t need to spend all of their time there in order to make things happen.

Conclusion

These are some of the things that you can do to make your business more attractive to potential buyers. Remember that you can’t increase the value of your business overnight-you need to put in your time and energy over a period of time.

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Jun
09

Tips On How To Prepare Your Business For Sale

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For you to sell your business seamlessly, it’s important that you prepare the business for sale. To guide you, here are some of the things that you need to do in order to prepare your business:

  • Exit the Business

You need to ensure that the business can run even in your absence. The best way of ensuring this is setting systems that ensure that your business is able to run on autopilot. This calls for you to clearly document the roles of each employee. You should also document what every employee needs to achieve within a given time.

When pitching your business to potential buyers you should clearly show that the business has the ability of running in your absence. Remember that no buyer is willing to buy a business that requires full time attention. Also, no buyer will buy a business that will stop working once you leave.

  • Document Relationships

Do you have any unwritten agreements with your suppliers and clients? You should put them in writing. In addition to making your business appear stronger, writing down the agreements makes them binding and can’t be broken. If there are any contracts that you had signed before you should check them and ensure that they are up to date. You should also renegotiate any contracts that you deem necessary.

  • Do a makeover

Just like when selling anything, you need to create a good first impression of your business. The good thing is that there are many ways in which you can give your business a great impression. Some of these ways include:

Inventory

you should sell all the obsolete or slow moving stock items. In addition to improving the sale figures, selling the obsolete items will also aid in eliminating any disputes about the value of the inventory during the sale.

Business premises

you should look at the business in the eyes of the potential buyer. For a great impression, you should clean it up, maintain and paint the necessary areas. As rule of thumb you should ensure that your premises comply with all the regulatory requirements.

Employees

are there any employees who haven’t taken their leave? You should ask them to do it. This is to prevent the buyer from reducing the buying price.

Leases

it’s common for businesses to lease their premises. You should review the leases and ensure that they are up to date. You should also renegotiate the ones that need to be renegotiated.

 

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May
26

Preparing Your Business For Sale

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Deciding to sell your business is an emotional decision. Once you think about selling then it is time to make the move – assuming all decision makers are on board with this decision. Once you decide that you want to sell then make the move. Once you think about selling then you are already making an emotional move toward selling.

The first area to understand is that books and records are important. A business needs to be able to justify a price through tax returns, equipment values and inventory values. A pure “cash business” with no substantiating data is very difficult to sell. But in these “cash business” situations where the actual cash flow and declared cash flow are different, there are still ways to prove the entire cash flow through a second “book” or receipts.

The second area to understand is that you should keep the business running as is and NEVER tell anyone that you are selling. Any hint or leak that you are selling could be catastrophic to the business and the businesses’ future. Employees and customers are very good at noticing changes that may indicate a business is for sale. This will have a devastating result on the business.

Once the decision has been made to sell, you have to prepare various facets of your business before taking the step toward selling as part of ‘Preparing Your Business for Sale’.

Here is a general list that you need to prepare…

  1. Up to 3 years of tax returns – including P&L statements, if available
  2. Equipment list & value of equipment at replacement cost
  3. Value of inventory at your cost (not retail)
  4. Value of real property (if included in the sale)
  5. Copy of the lease if business is on leased real property

Here is what you DO NOT want to do…

  1. Tell anyone that you are going to sell – confidentiality is of utmost importance
  2. Change the business models or daily operations
  3. Take cash out of the business that will alter subsequent financial statements

Once you have the documentation in place then contact us for a confidential NO OBLIGATION meeting – 416 364 5550

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