What is that will make your business the most attractive to the most potential buyers?
Accurate Financial Records
Having your business books in order so that potential buyers can have the most accurate look at your revenue, sales margins, profit, and owner's earnings will make your business most attractive to business buyers. Buyers are looking for a business and not a job. Therefore they want to see how much can be earned without them having to work in the business every day. They want to hire a manager to run the day to day operations so the cash flow needs to be there to support that while at the same time throwing off earnings for the new owners. Your financial record keeping should indicate what those potential earnings will be.
Having A Realistic Value
Valuing your business by accepted standards such as 3 to 4 times the Seller's Discretionary Earnings will greatly help your business sell. Far too often business owners get emotionally involved in valuing their business and set a price that is way outside what it is actually worth. While here we will not go into the calculation of Seller's Discretionary Earnings in depth, we will say that it is annual revenue less annual expenses and what the new owners will have to pay to have an experienced manager run the day to day operations of the business. This number times a 3 to 4 multiple is typically reasonable for a starting asking price for those businesses doing five million or less in gross annual revenue.
Curb Side Appeal
In a lot of cases it will still come down to how do the potential buyers view the business itself. Before you list, if the business has a location or facility, make sure that it is as clean and presentable as possible. Most buyers do not want to purchase someone else's mess or trash. They will want to see that the business has been well maintained and cared for.
Have A Go Forward Plan
New buyers will want to know things like who is in and who is out. Are there key employees who are staying? Are their employees or existing contracts that are vital to the ongoing business success where a plan has been made to retain them or renew them. Make sure you have detailed all the contacts and contracts of the business along with any key vendor or supplier relationships that need to stay in place.
Build Business Credit
Often overlooked is that the credit of the business stays with the business and does not go with the existing owners. This means that vendor and supplier lines of credit can stay with the business and be available to the new owners. A strong business credit profile and scores can also assist the new business owners with securing financing to purchase the business or to secure additional business financing after the sale is closed. Make sure you spend the prior six months before the sale doing everything you can to make your business bankable and to have strong business credit scores before the sale.
Inside the Level4Finance business success system you will have access to step-by-step comprehensive business credit building instruction to obtain everything you need to build and maintain strong business credit scores and to pre-qualify for a spectrum of business loan programs.