"A Fool with a plan can beat a genius with no plan" - Oilman T. Boone Pickens
Every successful Entrepreneur has planned along the way. You have planned the startup & planned for expansion and growth, but have you thought about planning your exit? Surveys indicate that the majority of small to medium sized business owners do not have a family member who is interested in taking the reigns. What should an owner do? Since most types of businesses can be sold, having a plan is the most prudent course of action. When developing that plan it helps to know what your business will look like to a prospective buyer. Whether you are going to sell to a competitor or a new business owner here a few steps you can take to make your business look its best.
1. Financial Statements.
Have your books & records in order. The financials are the scorecard of your business. Typical buyers are going to ask for a minimum of 3 years of Tax Returns & P&L statements. Having good books will instill confidence in the buyer. In addition, it will make it easier for a bank to finance the sale of your business. If the books are not in order, it may be necessary to bring in a professional bookkeeper to assist with the day-to-day record keeping. This will more than likely pay for itself when the time comes for the sale.
Are their responsibilities documented? This will provide clarity to the potential buyer regarding their roles and how essential they are to the business.
Additional information may include contract terms, benefits, interest in staying with the company in the event of a sale.
It is important that you be able to describe what your company does and your role in its success. Potential buyers will ask questions some of which are intelligent and well thought out, others not so much. How you respond to them is important. Instilling confidence in the business & the seller is paramount.
4. Tie up loose ends
If your contract with a big customer is going to expire before the business is sold, do what you can to get the customer committed to a renewal even if only for 1 year. The goal is to remove the uncertainty.
The same is true of your lease, if it is going expire in the near future talk to your landlord. This conversation may provide some insight into their thinking before you sit down to renew or you may be able to negotiate an extension or Term option.
Speak to your accounting professional regarding the most advantageous structure of a sale. A short conversation with your accountant can minimize the impact of federal & state tax liabilities.
Whether you are considering selling your business in the near future or 3 years from now Transworld Business Advisors of Monmouth County is confident you will find these steps useful. If you are interested in a free consultation please call us at (732) 741-7024 or email firstname.lastname@example.org visit our website www.tworld.com/monmouth