First Choice Business Brokers
Are you Ready to Sell Your Business? First choice business brokers can help you valuate and sell your Las Vegas Business.
Selling a business is not a spur-of-the-moment decision so if you are selling your business and you should think twice about doing so.
Here are a few things to ask yourself before making a big decision of putting up your business for sale:
1. Is your business ready to sell?
You cannot put your business up for sale without preparing. You need to include at least two to three years of accurate tax returns and reports that show the maximum profitability of your business. You need to have complete and accurate books that show your revenue, expenses and cash flow. This should also include a list and valuation of your current assets.
By doing so, you will be able to get the best possible price for the business once it goes on the market.
This process may take at least a year of preparation to make sure that everything is in place and accurate.
2. What is the value of your business?
Family-owned businesses tend to have extra expenses that are incurred by the owners. They tend to “live-off” the business and put in unnecessary and additional expenses such as country club dues, insurances, fuel, meals and others. Although it is the owners’ rights to put these in for tax purposes, having these on the books will make your business look less valuable as it does not show the business’ true potential and cash flow. Loading the business with tax write-offs can make you appear less profitable and cause a buyer to undervalue your business.
3. Who should be on your team during the process of selling?
The buyer will most likely have a whole good team to go over your business during the transaction – from start to end – and so should you. It is important to think of people that you need to help you through the process. Do you need a lawyer to go over legalities and papers? Do you need a CPA to look over your books and valuation of the business? What about an appraiser or consultant? It is best to look for the best people that will help you along the way, to help you make the best decisions.
4. Is it the right time to sell?
Most people tend to sell their business when it is on the decline. That is the exact opposite of what you should do. If you have really decided to sell your business, you should do it when you are on top of the game because that is when your business will attract more potential buyers and cost more. Some would ask why you should sell when you are making good money. That is thinking like a business owner and not an entrepreneur.
5. Is the market right?
Before selling your business, you should look at the current market conditions of the industry you are in. Back in 2006, selling a home improvement business showed a huge return. A few years later, many housing-related businesses such as roofing, sidings, home financing and the likes lost a big value to their businesses. There were companies who had big offers and turned them down who could not even get a third of the price a few years later. You need to check and wait until the market shows better conditions to sell.
6. Can you cope with the changes?
With the technology, needs and trends change in a blink of an eye these days. Rapidly changing technology, globalization and business trends can be too much for some business owners. You need to keep yourself trained three or four years down the road. There is also a need to be constantly looking out for changes and innovation on the market to be able to keep up. If you believe you cannot stay afloat with these constant fast-changes, you need to sell your business before your failure to adapt catches up with you. People tend to wait and the industry passes them by, leaving a less valuable business to sell.
7. Can my business work without me or a key customer?
Having the business and employees rely on you for all decisions, is not a good sign to buyers. This is also the case if one or two customers make up the chunk of your market. A buyer will take his offer elsewhere if he sees that the business is too dependent on the owner or a single customer. A good business is one who can operate while the owner is on vacation and has good revenue diversification.
8. Would you be willing to stay if the buyer wants you to?
Sometimes, buyers will ask the business owners to agree to stay on in a consulting role even after the business has been sold. There are deals that were sold because the owner has agreed to do so. You need to determine if this is something that you are willing to do. If you could do this, this will also help sell your business and increase the value of the company as it reduces the risk to the buyers.
9. Are there potential deal breakers?
There might be certain things in your business that you felt you were okay with but might be a deal breaker for the buyer. These could be unresolved issues particularly in company ownership, accounting and intellectual property rights that might interfere with a sale. It is important for you to consider these things and try to resolve them before you put your business in the market.