Many entrepreneurs dream of one day retiring and reaping the rewards of their hard work. However, it’s a common oversight for business owners to devote most of their energy to growing their enterprise, neglecting the vital task of preparing it for sale. This oversight can impede their ability to attract buyers, diminish the final sale price, and complicate the entire selling process.
To maximize the value of your life’s work in establishing your business, we offer the following guidance for a more successful sales journey:
- Begin Planning Early: The foremost piece of advice is to initiate your planning several years in advance of your intended selling date. This affords you the opportunity to not only devise the most effective exit strategy to meet your financial objectives but also to assemble a team of seasoned professionals who can enhance your outcomes.
- Financial Housekeeping: During the initial planning stages, a proficient financial consultant can be invaluable. They can assist you in organizing your financial records, updating policies, and segregating personal assets from your business. Moreover, they can scrutinize compensation packages to ensure they align with industry standards. By eliminating the risk associated with haphazard records, the seller instills confidence from the buyer.
- Showcase Your Competitive Edge: When the time comes to bring your business to market, it’s essential to highlight your company’s competitive advantages. This could encompass factors like an excellent location, a pricing advantage, a consistent track record of exceptional service, or any distinct attribute that can be effectively conveyed to potential buyers.
- Consultation for Stability: Additional consultancy can focus on stabilizing your annual sales and earnings to facilitate a more accurate valuation of your business. Ensuring that your workforce, capital, and facilities are well-suited for future operations is also crucial.
- Collaborative Professional Team: If your tax preparer/CPA possesses experience in business sales, they can offer specific insights that enhance your business’s value. Coordination among your tax preparer, financial planner, and business broker is paramount to ensure they are working harmoniously toward the same goal, sharing vital information.
- Engage a Financial Planner/Wealth Manager: Consider a financial planner or wealth manager as an essential addition to your professional services team. They can help you determine a realistic minimum sale price for your business, taking all variables into account, and can suggest strategies to improve your financial position. They can also help you understand the opportunity cost and effects of multiple scenarios. Additionally, they can aid in assembling a professional services team by connecting you with experienced third-party business brokers, CPAs, or contract attorneys.
By engaging in thoughtful and proactive planning, a team of seasoned experts can assist business owners in increasing their company’s market value and streamlining the sales process, making it smoother and faster than it might otherwise be.