3 Tips on Preparing Your Business for Sale

3 Tips on Preparing Your Business for Sale

1. Reduce or eliminate owner dependence. The less important you are to your business, the more marketable your business will be. Businesses that are dependent on the owner are tough to sell. Buyers love businesses where the owner plays a very limited role.

2. Increase recurring revenue as a percentage of total revenue. The more long term contracts you have in place, the more valuable your business will be.

3. Clean Financials. Businesses that report all revenue and minimize non-business expenses on tax returns are in demand. Buyers and banks love clean financials. Banks will not finance the purchase of a business that does not show a Tax Return cash flow to cover the financing debt. This limits the number of buyers who will be able to purchase your business. Businesses without clean financials are tough to sell.

4. I know I said 3 but this is also important. Steady growth. Businesses that have a downward trend in revenue and income are difficult to sell and very difficult to finance. Buyers love to see an upward trend. They hate downward trends.

Questions about selling or buying a business?

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