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Cleaning Up: The Steps to take before Selling Your Business
26
Mar 2019

Cleaning Up: The Steps to take before Selling Your Business

By webmaster

As the time comes around to sell your business, it becomes increasingly important to take the necessary steps to ensure a smooth sale.


Determine your value:

It is important to have a realistic understanding of the market value of your business. An understanding that includes all assets such as inventory, furniture, possible real estate, equipment, leasehold improvements, etc, as they can show a potential buyer any and all future opportunities that currently sit in the business.


Organizing and Cleaning Financial Documents:

Before selling, it is key to have a clean financial record for the business about to be listed. If the business has any debt, it is a good idea to pay it off before listing, as large amounts of debt can turn away potential buyers, and they usually expect you to pay it off at or before the closing takes place. Financial documents must also be clean and in order; a business that does not keep a clean track of income is far harder to sell than one that does. To clean the books, it is good to sit down with an accountant and organize all financial statements as well as tax returns for the last 3-5 years.


Identify and Fix Weak Links before Listing:

Any weak links in the business will also found out by a buyer during due diligence and many times it can mean the end of the transaction by the potential buyer. The best way to counteract this, is to fix them before a potential buyer can point them out.


Increase Cash Flow:

All potential buyers want to see profit in the business. Seldomly does a buyer want to buy a business that makes no money or profit.  If the business is losing money, or sales are on the decline, then this may not be the time to attempt to sell. Reach out to a reliable consultant who understands how to increase sales or profit. If a partial remodel or pushing out old stock at a discount can bring a substantial increase to the profit margins, it is a good idea to do so. It can also be a good idea to start a marketing campaign to bring in a new customer base.


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