Every business owner’s goal is to maximize their company’s value. A business needs to thrive independently of its owners, to have its own culture and structure, to have processes, products, property rights, and anything else that allows it to continue as a separate entity. When selling your business, use the following information to ensure you hold these criteria.
Ensure You Have a Solid Reputation
In the current economy, business acquirers are searching for acquisitions that significantly impact the industry. Ensure that your company has an impeccable reputation. Sellers want to refer to their enterprise as a leader in their industry. Intelligent buyers can determine consumer impressions by searching the internet, as most business websites now provide customer reviews. Buyers can attend trade shows and conferences to ask competitors and suppliers about a specific company’s status.
Build Systems and Procedures
A way to showcase your business’s value is to demonstrate its independence and effectiveness. A point-of-sale system is imperative for all aspects of your business operations. Through streamlined processes, your retail store pos system for your business makes it more efficient and productive. It helps you and a potential buyer understand your business’s health by analyzing inventory, employees, customers, and sales. Systems and procedures will influence how much goodwill a buyer is willing to include in a purchase agreement.
Maintain Immaculate Financial Records
Financial statements specify the value of the business, and the more reliable the financial statements are, the more likely they are to stand up to due diligence. Accurate record-keeping is crucial to tracking the progress of your business. They can reveal the rate of growth in your business, which commodities sell, and what changes are necessary. Unkempt financial records are often a red flag for a potential buyer. Financial statements prepared by an independent auditor are generally preferred over internal financial detailing, as they are inherently more professional in their presentation, account categorizations, footnotes, and organization.
Show a Stable Operating Facility
Even if a business operates independently of its home location, a buyer may not want to move the company right after the purchase. There should be an option for the company to remain in its current building for at least three to five years through a lease or ownership. In the case of an expiring lease after closing, the buyer will have to renegotiate. This hesitation can jeopardize the value of the purchase. Lease options are an excellent way to remove this uncertainty, allowing the business the right, but not the obligation, to extend its lease beyond the current term.
Offer a Solid Customer and Supplier Base
Having a healthy flow of new clients is a big plus for your business value. Interested buyers want to know what earnings come from recurring revenue, so having a solid base of returning customers is an advantage. Additionally, it can be detrimental to a business to have a narrow base of suppliers or to be highly dependent upon one supplier. Business owners want the option to routinely purchase goods from multiple suppliers if one supplier experiences shortages or interruptions.
Have a Strong Management Team
A strong management team, in which key activities can operate independently of the owner, represents a higher worth for the business. A buyer’s evaluation of the company will include consideration of the management team’s depth and stability. It is important to note that an owner’s influence over sales and marketing can detract from its value. Buyers will factor this risk into acquisition valuation or deal structure if the owner holds the top relationships with key accounts. The price may be conditional upon the company’s ability to maintain ongoing customer relationships.
It is a big decision to sell your business, and after all the effort it takes to build an enterprise, it will be challenging to let it go. However, selling your business can be a good thing. It is an opportunity to evolve in your industry and start something new and exciting.