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Selling
Tutorial
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3. A Few Things
to Consider |
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 Contact
Information |
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A
FewThings
To Condsider
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Buyers
Want Cash Flow
The first thing to keep in mind is that the
vast majority of buyers want to buy cash flow.
Sit down with your accountant or bookkeeper
and begin to get your financial statements
in order, with cash flow the order of business.
Cash flow is not the same thing as profit.
Most buyers look at the profit and loss statement
or tax return, as well as owner or family
compensation.They will consider any excess
compensation to employees and family. Buyers
will also look at large, one-time expenses
such as a new computer system or remodeling.
They will consider non-cash items like depreciation
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and amortization. Interest
expenses will be reviewed, as will owner prerequisites.
These are items that a professional business
broker considers when advising a selling client
on a selling price.
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*Insider
Tip
What about the Internet? The Internet
is a real "buzz" word
- and if its use is appropriate
for your business, then developing
a web site is important not only
to your on-going business, but
also to a buyer. Many buyers are
conscious of what the Internet
is doing for many businesses.
If you have a web site for your
business, it could be a big plus. |
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Appearances Do Count
The time to replace that old worn-out piece
of equipment is before you decide to sell.
Don't assume that a new owner will want to
do it or that the price will be slightly lower
because you haven't replaced it. The time
to "spiff up" the business is now,
even if you aren't selling. Fix the sign,
replace the carpet, paint the place - make
it look good. Even if you're not selling,
it's just plain good for business, and you
never know when the time to sell occurs. Keep-in-mind
that anything that increases sales also increases
profits and the all-important cash flow!
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Everything Has Value
There are other things that add value to your
business. Don't discount the value of customer
lists, proprietary products and/or techniques,
well-maintained equipment, secret recipes,
customized software programs, or good employees.
These are termed "off-balance sheet items,"
and although not used in most pricing models,
they add to value. Look at your business very
carefully so you don't overlook those items
that make your business more attractive to
the buyer.
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Eliminate
the Surprises
Long before you put your business on
the market eliminate the surprises!
Review every facet of the business and
remedy any problems that could appear
during the sale process. No one likes
surprises - most of all potential buyers.
Whether legal, accounting, environmental,
or anything else - solve it now.
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*Insider
Tip
This may sound like something
that should have been done when
the business first started, so
it may be "after-the-fact".
You should create an operations
manual. You may already have one,started
one years ago, or simply, have
thought of doing one. Now is the
time. It may actually create added
value to the business. Even if
it doesn't, it will impress buyers
that you have your business "act"
together and should help you sell
more quickly and effectively.
Preparing a manual on how to operate
your business can also be helpful
even if you don't want to sell.
It doesn't have to be elaborate,
just cover the basics. A collection
of ads that you have placed a
catalog or sample of products,
publications, or menus (if the
business is food related) is also
impressive. Include anything to
do with the business that might
be helpful for a new owner. However,
don't include anything that is
proprietary, such as customer
lists, suppliers or secret recipes,
etc.
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Copyright
2004 Business Brokerage Press |
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