As a business owner, you have certainly enjoyed numerous intangibles that come along with running a successful business. Your business may be chugging along comfortably with flat sales and earnings. That may be fine for you and your family, but it is not enticing to buyers. They care primarily about the earnings and cash that your business has been generating and can predictably generate in the future.

Simply put, you must configure your business to give it maximum appeal to prospective buyers. In many cases, this requires some significant changes in the way you are currently running your business. You will need to think like a prospective buyer as you decide what changes to implement. In addition, unless you are under significant pressure to sell quickly, you may need to take a year or more to get your business ready to sell at the highest possible price.

Four key business areas where change is highly advisable.

• Unless you are already running your business to maximize earnings and cash flow, you will need to make some significant changes in order to attract prospective buyers. You should eliminate expenditures that do not directly contribute to the growth of sales end of profits. This will include capital expenditures that will not deliver short-term ROI prior to the sale.
• You should also consider strengthening your sales and marketing efforts to drive growth. Unlike capital expenditures, these investments will have a near term positive affect on top and bottom line.
• In addition, you will need to show potential buyers that you have a plan to move the company successfully into the future based on such things as new products, new markets, new distribution plans, cost cutting etc.
• You will need detailed documentation on every core element of the business so that your buyers have a clear understanding of your operation. Thus, if you have well established processes, manuals, job descriptions and sales reports reports, your buyers will feel much more comfortable about making a significant investment in your business. On the other hand, if your business is run mostly on gut feel, it is time to improve your process and reporting efforts.

As you are implementing these changes, you will also need to establish a planning process that will take you smoothly from your intention to sell to a successful closing with a willing buyer and at an optimum price.

• What is your business worth?
• How to get your business ready to sell
• How to choose an M & A advisor
• back to Selling Your Business