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End of Year Tips to Prepare Your Business For Sale

Often small business owners don’t realize that a buyer for their business will want to see three to five years of past tax returns when they buy the business. Many businesses decide they want to sell, but sadly their books will not support the price they want for the business.So to help you get the most for your business when you do decide to sell (whether it is next year or 10 years), use these helpful tips:”Clean” the booksTypically your accountant will show you how to minimize your tax liability and this will also decrease your profit and the value of your business. When you start considering to sell your business, you want to maximize the profits and this will maximize the value of the business. So if you are considering selling in the next three to five years, now is the time to take out the extra expenses.For example you might want to remove from your books any non-essential expenses – like a family trip to France to order product. Although this may be a legitimate tax write – off this little trip may drop your profits by $10- $15k and hence drop your value by as much as $45k or more.Also, if you have a cash business, put the cash in the business. It might be too late this year, but make a New Year’s Resolution, to put ALL the cash you generate in the business. This will increase your revenues and your profits.The new buyer will always pay you far more than the savings you will net from the IRS.Increase revenuesSince the value of your business is heavily weighted on revenues and profit, amp up the marketing, especially for retail in this buying season. A well implemented marketing plan can drastically increase your businesses worth and help you top dollar when you sell. And remember you need three years of numbers for the buyers, so start early. It is better to have four or five years of great numbers than to only have one year!Now when amp up your marketing and sales, there are few things to consider:If you can capture your customer’s contact information, this worth more to a new buyer. So if you can and if appropriate, collect your customers contact information like email address and home address. If you can also get birthday or other important dates, this will impress the new buyer.Avoid Daily Deals. It might be tempting to try a Groupon or other daily deal site to ramp up your traffic, but this is a dangerous double edge sward. The buyer can see this as a huge risk and deals have been “killed” over daily deals. My recommendation is to avoid them. If not implemented properly, they cost you much more money than you make.Hire a professional. If marketing or sales is not your expertise, hire a professional. There are several marketing consultants and sales Consultants in Jacksonville. With fresh ideas and a sales and marketing plan, your business can grow and drastically increase in value.Consult with a Business BrokerAlthough you might not be thinking about selling for a few years, consulting with a business broker early will help you understand what business buyer wants and help you know what to do to maximize your businesses value. Since your business is likely the largest part of your retirement, having a business valuation done early will allow you to see how your business is valued and manage its value.