If you are thinking about selling your business, and this is the first time you will be entering the business marketplace, then you probably already know there will be a lot to learn before you get to a closing table. This is part three of a series that will let you in on the practical knowledge you would typically have to get by going through the process and making every mistake possible – only you have the benefit of our experience to help you navigate this complex road. Here are the things only experience can teach you about selling your business.
You Need Organization
Business owners work really hard, and one of the common issues we see when the time comes to sell is a complete lack of buyer-ready organization.
You need to be somewhat organized to run a business, but what works for one person (like horizontal filing a.k.a. a room full of stacks and stacks of paper, taking every business-related piece of paper and shoving it unceremoniously in a box on the office floor) probably won’t work for everyone.
If you are even considering selling your business, you will absolutely need to have someone look at your books and business records and get everything into a format that buyers will be able to read and understand.
Most business owners who try to sell their business on their own or those who enlist realtors or attorneys to help them sell will likely end up only giving buyers a quick and dirty P&L and a copy of tax returns.
Look at the numbers on the bottom of your tax returns. Do they really give a good picture of how your business did last year? The answer is probably not.
What you need before you sell is a recast of your financials. In a recast your numbers will be re-assessed (see this article about recasting) and the benefit you actually get from your business will be translated into a form that buyers can understand.
Recasting is an essential part of getting offers from buyers. A business with properly recasted financials will look far better on paper than a business with just tax returns.
Talk to your business broker about how to get better organized and how to get your records recasted so your business is presented to buyers in the best light possible.
Are you a business owner who is famous for horizontal filing or the box-o-receipts? Would you like to know more about how to make your business stand out from the crowd? Ask us! Please leave us a comment or question here, and we will be happy to help.
Want to read part 1 – You Need Help? Click here.
Want to read part 2 – You Need Time? Click here.
Want to read part 4 – You Need Reality? Click here.
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