Perhaps the most beneficial thing you can do to maximize the value of your business is to get your books in order.
That doesn’t mean they need to show a great performing business but they need to be clear, understandable in good order.
Financial accounts will be carefully examined by any potential buyer (and their accountant or adviser) so its vital not only are the accounts in order but that you know them inside out.
Typically you’ll need to show 3 years of accounts when selling a business (although this is not a rule).
Most importantly you need to be able to explain the accounts and explain away any significant increases or decreases in revenue of costs.
For example if you had a big revenue increase in between years 1 and 2 and then it dropped back in year 3 you need to be able to explain why that one year was a ‘one off’ and doesn’t show a declining business. Perhaps you had a big one off client, orsold a particularly large one off contract.
As long as you can explain it then it shouldn’t affect your prospects of a sale.
There are many types of business income but by far the most attractive to business buyers and investors is long term recurring income.
If your business relies on having to sell something every hour, every day, every week or every year then you are only ever as good as your latest sales figures.
Business Valuations Buyers want to know a business can work without its current owners and the best way to demonstrate that is with a systemized and procedure driven operation. Arguably the best time to sell your business is when you know it can operate entirely without you – that’s when you know it’s been properly…
