Businesses for sale Las Vegas
How to Prepare your Las Vegas Business to Sell
Preparing a solid exit strategy is important when you are planning to sell the business now or in the future. It will help you increase marketability and add more value to your business.
Here are steps that you can do to prepare for selling your business. Some of these can be done right away and some might take a little more time but can be accomplished in the next year or so.
1. Increase Revenue
One of the first and most important things that a buyer looks at is the sales trend. A buyer is more attracted to a growing business rather than one where the income decreases every year. It will also help the buyer that the revenues look good should they be applying for outside financing in buying the business.
Revenue is the raw income generated by the business before all expenses are deducted. A company that shows rising revenue every year signals that it is selling more products or services which in turn help the company grow.
You could increase your sales revenue for the year by making a higher sales goal for the team. You might also look at hiring more people to do this, if needed, or just renew the effort for more sales.
It is also important to record all revenue in the company’s books. Not recording all sales are not only illegal, but it will also decrease the market value of your business. Buyers will look at the business revenue that is verifiable.
2. Increase your Customer Base
While increasing your revenue, it is also helpful to increase your customer base. Adding different demographics to your customer base is a great way to do this as it spreads the revenue to as many customers as possible.
Having your eggs in one basket might be easier for a business owner but a prospective buyer might find it unsettling. It is also risky to have one or two huge customers where you get your revenue as compared to small but many others. Having many customers will also help stabilize the income stream if one major customer pulls out. A good rule of thumb is to never have one customer making up more than 20% of your revenue.
Diversifying your customer base will not only help the increase in your revenue but will make selling the business easier.
3. De-emphasize your personal role in the business
While most business owners find it important to always be there to make decisions and manage the business at all times, you should start staying back and de-emphasizing yourself from the business in order to maximize its value. You should start letting the employees, managers, and customers start dealing with other people in the business.
A buyer will find it appealing if the managers and employees are able to work on their own and provide solutions to the problems themselves as compared to having the owner find solutions and make decisions for the business. This means that a business will be able to run even if the owner is not around.
4. Develop a Strong Management Team
In connection with having your employees make decisions and finding solutions themselves, you should also have a strong management team. A new owner should feel confident to step on your shoes once you are gone and see that the management will be able to help them and guide them along the way.
Most of the time, buyers feel that the strongest asset in a company is its employees.
Buyers will also want to know the following about the employees and the managers:
i. How long have the key employees been in the company?
ii. Do they have experience in the same industry as the business
iii. Will they stay even if the old owner is gone
iv. Who is the key back-up should the owner be gone
5. Reduce the number of Family Members working for the Company
Once the company is sold, the family members working for the company will also be gone. This means there will be plenty of positions that will be vacated and the new owner might have a hard time filling these in.
While preparing for the sale, it is important to determine whether these family members will be staying with the new owner and if they will comfortable with that. Should they be not, you should start training new people to fill in their roles before you start putting the business up for sale?
6. Reduce the Owner Perks
Most business owners have most of their expenses shouldered by the business. They get perks such as transportation, meals, allowances, health insurance and more. These are on top of the salary itself.
When preparing your business to sell, it is best to take away these additional expenses and perks for the owner. Aside from the additional perks, any expenses and non-essential salaries incurred by family members should also be eliminated.
Doing so will increase your income shown on the books thus making it look better and attractive to buyers. It will help you show the real available cash flow of the business.
7. Sell or Remove Unnecessary Personal Assets
Businesses sometimes accumulate unnecessary or duplicate assets. These may be obsolete assets or are not currently used in the business. If these do not benefit the business, you would not expect the buyer to pay for these assets as part of the selling price.
By selling these unnecessary assets, you will be able to gain revenue while cleaning the business with clutter at the same time.
8. Reduce Inventory to a Normal Level
Aside from taking away all the unnecessary assets in the business, you should also take care of dead or obsolete inventory. You should make a physical inventory and analyze the value of such item. Inventories that no longer have market value should be get rid of or sold for scrap. Reducing the inventory to what the business will only use will help justify the amount of the business and show the buyer the normal value needed to run the business during normal times. This will also help turn excess inventory to cash.
9. Other items needed to improve the business before a sale
i. Improve the company’s website
ii. Have written policies and manual available
iii. Make sure that leases expiring soon have the available renewal in place
iv. Eliminate unproductive employees
v. Collect all receivables and write off uncollectible bad debts.
Putting your business in good shape will not only help you in the present but it will also improve your chances of selling your Las Vegas business when the right time comes. If you'd like to learn the 7 key profit drivers to help you exit successfully from your business, download a FREE copy of my #1 Best Selling book on Amazon. Grab the PDF version for free here.