Business Valuation Tips Before Selling a Business
- Author Anne Brown
- Published July 8, 2009
- Word count 632
Before you embark on selling a business you should consider the variables in your industry that most impact business valuation. For most small businesses, it is usually increasing revenue, profit and margins. There are other real issues to consider though that can have a real impact on a business’s valuation. Before you list your business for sale please take a hard look to see if you have done everything you can to maximize its valuation and if there are any ‘quick fixes’ that you can undertake to assist you. All too often, business owners decide that selling a business is what they want (or need) to do and rush too quickly into the process.
Some issues to think about when selling a business:
How do the financials present?
One of the first things that a potential business buyer will inquire about is the financial performance of the business. In most cases a buyer will be looking for typical things like increasing sales, profitability and improving margins over time. This is not always the scenario for all businesses though. We are not suggesting that you alter the financial results of the business in any way but it would be advisable to do some analysis in order to properly tell the story of the business and detail its past performance. For instance, if sales have risen only moderately during the past 2 years, is there a reason behind this? Perhaps a key supplier went on strike or perhaps you re-tooled your business to launch a new product or service? A buyer will certainly do their own analysis of the financial results of the business but try to mitigate any possible unwarranted ‘red flags’ by doing some initial analysis of your own in order to paint an accurate picture of your company. This is something that a business broker can help you with.
What condition is your business in?
By this we mean the physical shape it is in. A clean, tidy and well organized business has a distinct advantage over a similar business for sale that is not. Take the time to organize your premises. This will significant help you in selling a business.
Is your equipment in working order?
If you are selling a business that requires machinery to operate please ensure that it is working properly and that it is serviced. Broken machinery is a red flag to buyers.
Are your books organized?
Do you have accountant prepared financial statements? Do you have everything in place that a business buyer will ask for eventually (such as income tax returns, Ontario retail sales tax returns, bank statements, AP and AR aging schedules, inventory lists, equipment lists, employee information like job descriptions, and so on). A well organized seller is a positive sign for any business buyer.
Are you ready for the transition?
While you may hold the perspective that you are selling a business, the buyer is mentally preparing to buy a business and embark on a new journey. He or she will be thinking about running the business after the close. Offering support after the transaction will assist you in the sales process and potentially impact the valuation. Try to think about how you can best do this. Perhaps a 2 – 3 week training period makes sense? Perhaps you can properly document important operational issues to pass on to the new owner after the business sells. Planning ahead to assist a business buyer in the transition will go a long way in helping you to sell your company.
Selling a business is a process that requires careful planning and a sound strategy. The above points are but a few of the issues you will encounter when you start the selling process. Talk to a business broker to learn more about the business sales process.
Business for Sale in Toronto, Hamilton and surrounding areas in southern Ontario, Canada. We are a full service business brokerage here to help you buy or sell a business.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- The Hidden Power of the Thyroid: Why This Tiny Gland Shapes Your Entire Health.
- The Thyroid Explained: Understanding the Silent Regulator of Health.
- Local Guide for Giles County and Pulaski, TN Real Estate Market
- Warts and Your Health: Why Ignoring Them Can Lead to Bigger Problems.
- The Hidden Dangers of Excess Weight: Why Your Health Can’t Afford to Wait.
- Exercise is Medicine
- The 100 mm Paradox: Why the “Boring” Focal Length Is Quietly Becoming the Most Dangerous Tool on Set
- The Invisible Science Behind the "Natural" Look: How Modern Optics Quietly Rewrite Cinematic Language
- Sustainable Weight Loss Made Simple: Unlocking the Secrets of a Healthier You.
- Clear Skin Ahead: Understanding Warts and How to Remove Them Safely.
- Ask AI: The Revolutionary Domain That's Reshaping How We Access Intelligence
- The Story of the Illuminati and the Birth of a Modern Myth
- From Prototype To Mass Production: A Step‑By‑Step Guide For Launching Plastic Parts Via Injection Moulding
- From Concept To Operating Room: The Role Of CNC Machining In Developing Surgical Tools
- Say Goodbye to Warts: Natural Solutions and Long-Term Prevention.
- Transform Your Body and Mind: The Complete Path to Weight Loss Success.
- What’s the Best Way to Plan a Kitchen Remodel in Baltimore? Expert Answers to Common Questions
- China Opens Medical Sector as U.S. Raises Barriers
- The Complete History of the Stock Market: From Ancient Trading to Modern Global Exchanges
- Shades of Blue, Dramatic Doors, and a Luxe Music Room
- Curating Vintage Treasures for the Luxury Ranch Farmhouse
- Creating a Sacred Yoga Studio with Carved Wood and Vintage Elements
- Mastering Weight Loss the Smart Way: Building Healthy Habits That Last.
- Warts Uncovered: Causes, Myths, and Proven Ways to Remove Them.
- Which Shopify Store Management Services Should I Choose for Long-Term Growth?
- Texture that Transforms: Styling Rooms with Custom Sisal Rugs
- Creating Holiday Magic with Vintage Furniture
- Out of This World Housing Opportunities in Lincoln County, TN
- Banishing Warts Naturally: Everything You Need to Know About Causes, Treatments, and Prevention.
- The Ultimate Guide to Sustainable Weight Loss: Strategies That Actually Work.