(PRWEB) January 08, 2014
For most business owners, their business is their greatest asset. Many business owners rely on the proceeds of the sale of their business to fund their retirement. Therefore, selling their business for maximum profit is crucial. Yet obtaining maximum profit is no accident. It takes advance planning, surrounding yourself with the proper advisors, and taking certain actions before and during the sales process to make your business shine and increase its salability.
“The business owner who fails to plan and make his or her business as attractive as possible to a buyer is leaving money on the table—money that could be used later to live comfortably in retirement,” says Anne Ertel-Sawasky, Senior Vice President of VR Lakes Business Group, Inc.
The first step is to examine the owner’s personal situation and predict when to sell. Reasons vary with each business owner and can be as simple as boredom, poor health, divorce, an inability to get along with partners, or the desire to retire. What is the worst time to sell? When the owner has to sell. Forcing a sale to happen more quickly due to health, divorce, financial difficulty or other similar issues will reduce sales price because the sale becomes a fire sale. Buyers see these reasons as a signal to offer less for the business. Allowing ample time to sell allows an owner to properly prepare the business for sale, market the business to the entire universe of buyers, and wait for the offer that will benefit the seller the most.
Even before putting the business on the market, the owner should prepare the business for sale. This means taking a critical look at the business from a buyer’s perspective. Are the financial records up to date and accurate? Have tax returns been filed? Is there sufficient documentation to back up the tax returns, profit and loss and balance sheets? Buyers and their financial advisors will take a serious look at the financial records and expect them to be consistent and verifiable. Lack of consistency and inability to verify the accuracy of the records is a red flag that will make an enthusiastic buyer flee from the transaction. What about the physical state of your facility? Is it clearly neat, clean, and organized, allowing a buyer to easily transition into ownership of the organization? Is the facility safe and well maintained? How is the attitude of employees and what would clients say about the business if asked? Does the business have a good reputation in the marketplace? Are sales and profitability on the increase and expenses on the decrease? Is the business owner reporting all income and expenses on the tax returns and profit loss statements? A failure to report all income and expenses can lead to a reduced sales price since the business is usually priced based on profitability.
Once the business is prepared for sale, contact a qualified, experienced business broker to discuss the various options to market and obtain maximum price for the business. Most businesses are sold to other individuals through a broker who facilitates the transaction, working in the seller’s best interest. A qualified business broker can price the business appropriately, create a marketing plan and market the business to the entire universe of buyers, thereby creating more competition between buyers and bidding the price upward.
If a business sells for as little as 10% more due to proper planning and using a qualified business intermediary, the business owner may increase their profit by $10,000, $100,000, $1,000,000 or more, simply by being prepared.
VR Lakes Business Group, Inc. has extensive experience regarding business and commercial real estate sales and transactions, and is ranked the #1 VR office in the world and top business broker in the state of Wisconsin. Lakes Business Group has successfully completed small to middle market and commercial real estate transactions and large M&A business transactions. Anne and Tom Alberts team up to serve the central and northeastern Wisconsin market, although they do work on business transactions throughout Wisconsin and the Midwest. For more information, please see http://www.vrbizlakes.com.