It is disappointing to see how many people lose millions of dollars due to inadequate planning for their exit. Worse, many companies are forced to shut their doors because they fail to lure a buyer. The worthless exit is heartbreaking. With just right planning, preparation and application, you can see your company attracting high value offers. Consider the following strategies to get maximum valuation of your small business.

Don’t Wait Too Long

Many business owners take too long to decide on selling the business; and by the time they make their mind, the income stagnates or they become too old to run the company. The best time to sell a business is when it is still booming. But that doesn’t mean you should hurry, even if you urgently need a pile of cash. The buyers have a strong power to sense your urgency and they will surely take advantage of it during negotiation.

So, the optimum idea is to begin the preparation earlier. It will provide you enough time to put things in order without much panic.

Eliminate Debtors and Worthless Inventory

Nobody likes to purchase a firm with a history full of long term non-payers or inventory flooded with out-of-date products. For non-payers, try to collect as much of balance as possible or just write them off. Clear up the pile of long-stored inventory and sell them. If needed, offer suitable discounts. These burdens will do nothing good except drowning you down.

Clean up Financial Records

The buyers are crazy for a company with accurate financial records. They are going to bombard questions on financial strength of your company. Prepare a clean record of all the tangible and intangible assets including trademarks, patents, equipments, contracts and inventory. When selling a business, you should make the balance sheet and taxation position representable.

Strengthen the Legal Stuff

People interested in buying your firm will surely focus on the ownership and structure of the company. Do you comply with all the regulations? Any ambiguity in the contracts with suppliers and clients can negatively affect the valuation of the firm.

Focus on the Growth of Business

Right from the inception of the sales process, make growth the motto of your business. The skyrocketing performance pushes the valuations higher and higher. Consider building a strong management team. It is always better to have your own management body answer the questions of prospective buyer rather than handing them a written manual. The buyer also wants to know roles of key people in the firm and how long they are likely to stay.

Don’t Make Yourself Central to the Business

People putting huge sum to purchase any company are mostly very smart. They know that after selling you’ll leave the firm. And if you happen to be the most crucial person behind success of the enterprise, how will it fare without you in future? At least, that’s what they think. Therefore, when you plan your exit, start training your managers to handle critical decisions and issues to enhance the saleability of business.

These steps are the backbone of increasing valuation of a firm before selling. Undoubtedly, they consume time, so it’s better to start the process early.