When is the Right Time?
Author: Keith Huggett
There are two key things that business buyers think about, and keeping them in mind will help you make money when you are selling a business: If they see that they can make money buying your business and that they will have to do less work do it, they will pay more.
Making more money
Most businesses sell at a multiple of their sales or a multiple of their profits. Increasing either will give you a higher selling price. One way to improve profitability is to focus on your expenses. Most businesses have room to cut expenses through great efficiency, rebidding vendor and supplier contracts and the like. If you do not have the time or perspective to do this, consider bringing in an outsider to help you.While lowering expenses is the low hanging fruit of boosting values, you really need to increase sales when you are selling a business. First of all, increasing sales increases income, which boosts profit. If you do it in conjunction with lowering expenses, you will get a double push. Even more important than generating more income is the ability to show that your business is growing. When buyers look at a business and see growth, they will usually pay a slightly higher multiple since they know that an investment will pay off that much more quickly.
Making ownership easier
While selling a business is hard work, buying one is equally challenging. While preparing for the sale, get your business affairs in order so that the buyer can easily step in and have access to what they need to manage it. At the same time, find ways that you can step away from running the organization. When a buyer sees a business that runs without the seller's active involvement, they know that they can own it without needing to put in an inordinate amount of work.The Tax Office Inc. is ready to help if you are selling a business. Our team can help you find efficiencies, organize your books and prepare for a sale. Contact us to get started.
