The decision to sell your business in the San Diego area has been made. Now, what is next? Before you can perform a business valuation and list your business for a competitive price, you will need to prepare your books by organizing your finances. Organized financial records will help to make your business more attractive to potential buyers and avoid issues when questions are asked later in the process. Your years of financial records will be under great scrutiny by anyone interested in buying your business.
There are five easy-to-follow steps you can begin as early as today. An experienced business owner may feel some of these tips sound like they are more suitable for new business owners, but we also know that busy business owners sometimes overlook things just to get by – if any of these steps have been previously overlooked, now is as good a time as any to get your northern San Diego business’s finances in order.
- Choose an accounting software program
If your business is very small, you may be able to manage the accounting in a spreadsheet. However, as your business grows, this may prove to be a challenge. Several programs can assist in proper accounting like QuickBooks, Wave, Zoho Books, and Xero, to name a few. These systems can help you with invoicing, payroll, financial reporting, and expense tracking, for example. This way, nothing is lost and everything is trackable whenever needed. Because hardware failures happen, selecting an option that allows for Cloud-based storage is more secure than software that stores information locally. If you have not been faithfully using one of these programs, the time has come to get caught up and organized.
- Set up a separate business banking account
Your business finances should be kept completely separate from your personal ones. This way, operational costs, profits, and even taxes are set aside for the business to run properly. Within this account, you can set aside funds for upcoming taxes, set up direct depositing for staff, and pay invoices from suppliers. If your personal finances are playing any role in the business, now is the time to resolve this.
When everything is coming from one to two business accounts, it is easy to track and manage. Whether you are balancing your books or being audited, be sure no page is left unturned – everything is transparent.
- Get a business credit card or small business line of credit
In the same vein as the banking account, some smaller expenses can be purchased with a credit card. Therefore, your business should have its own corporate credit card(s). Operational costs and expenses are easy to track when things are properly set up.
- Set up a filing system
To stay organized, you will need to keep records of everything and file them in a way that is easy for anyone to find what they are looking for. For example, store accounting records, bank statements, tax records, invoices, vendor records, etc. In addition, this is a great opportunity to also save contracts, permits and licensing, employee records, and other similar items. This way, when it is time to perform a business valuation, everything relevant is in an easy-to-reach location. Using a Cloud-based solution for storing documents (i.e., OneDrive, Google Docs, Dropbox, etc. ) will give you a secure way to back up your paper records and make it easy to share information when the time comes.
- Stay consistently organized
Finally, the most important tip of all – STAY ORGANIZED. Getting organized is one thing but maintaining this organization in your books long-term is key. Accounting and other related tasks can make the average business owner feel like they are drowning if it is left to a once-a-year activity. If you set up a specified “Admin” day once a week or month, you will never have otherworldly quantities of paperwork to sift through. When the time to sell comes, you will not feel as overwhelmed because you have already been preparing for this moment.
Once your books are prepped, you can schedule a meeting with a business advisor to perform a business valuation. Then, you can begin the process of listing, negotiating, and ultimately selling your business. If you have any questions, do not hesitate to call your local go-to business brokers, Transworld Business Advisors San Diego North, to evaluate the current state of your financial organization and what your specific next steps should be. Our experienced team has worked with businesses of all sizes in countless industries and is ready to take on your business sale.