Maximize The Sales Price Of Your Business
If you plan to sell your business in the foreseeable future, begin preparing for a business appraisal as soon as possible, ideally, three years before the sale. Some suggestions to increase the appraised value of your business are:
- Reduce unnecessary costs - Instead of aiming to reduce your taxes, focus on maximizing profits. Trim expenses like luxury cars, travel with only a partial business purpose, costly entertainment, business memberships, etc. Reduce nonessential employees, even family members, who are unlikely to remain with the company after the sale.
- Clean up your books - Write off excess inventory or fixed assets that are no longer used. Write off uncollectible receivables. Review your financial statements to make sure they are not too detailed or cumbersome. See if accounts can be consolidated to provide a snapshot of your business rather than a history.
- Consider an employment contract with the new owners - Offer to remain with the company for a period after the sale to maintain relationships with key customers.
- Get an appraisal early - Get an appraisal well before you intend to sell the business. This will allow you to better understand what factors influence the valuation. Then you can address the areas that will most affect the ultimate selling price. When you decide to market the business, the appraisal can be updated.