No matter how you structure a sale of your business, you will almost certainly get a better sale price if you take steps now to increase its value.
My friend Eric Williams, who is a business broker and consultant with Codiligent, LLC has several suggestions for businesses looking to boost value in the time leading up to sale.
1. Increase cash flow
Can you raise prices or eliminate expenses? For many small business owners, reducing their tax burden is second nature. But low taxable income creates a perception of low value for a buyer. In addition, eliminate owner personal expenses that are paid through the business, such as car allowances, club memberships, and the like.
2. Decrease risk perceptions
Implement a reporting system that gives you key information about company performance. Manage accounts receivable and implement credit and payment standards. Keep outstanding loans and financing needs to a minimum. Control growth at a rate that the company can finance internally and replace short-term credit with long-term, fixed-rate loans.
3. Highlight opportunities for growth and efficiency
Every buyer wants the chance to exploit undeveloped potential. Maximize the value of your business by highlighting untapped markets, new services, or technological advances that will take your business to the next level.
4. Use a professional
To ensure the greatest likelihood of a sale for your asking price, work with a qualified professional business broker to ensure that your company listing is presented in the best possible light to the widest possible audience of prospective buyers.