How to Sell Your Business for More Money

Only about 30% of businesses for sale sell. You have to cover the basics to maximize the "chance" to sell. Then it will take a lot more work if you want to get higher values or close the deal quickly.

 Maximizing your chances of a sale and exit value boil down to these 4 items.

1.  Grow your sales through the sale. As your needs change you may be tempted to slow down the sales growth. You may want to take less risk, put less time into your business or just focus on other things. This decision can be very costly. The value of your business will be calculated as a multiple of the profitability. This multiple affect can work for or against you. If your profitability goes up or down by $100,000 and your value multiple is 5X then your value has gone up or down by $500,000. Many business owners don't consider this as they near the end of their business ownership. Continuing to grow your sales and profits to the end will keep your value increasing and make the business easier to sell. Buyers need to see a long term path to increasing sales/profits/value. 
2. Set a fair price. Get a professional valuation from someone who is trained in valuing businesses. A professional valuation of your business will provide insight into your industry with value drivers and detailed comparisons to other similar businesses that have sold. The value is your KPI for exit. You want to make sure you are using a good baseline. If the value is not high enough, grow the business and price it fairly. Pricing the business fairly significantly increases the chances of selling your business and is the #1 reason businesses don’t sell.
3. Get your records in order. Buyers expect to see monthly financial statements, taxes in order, permits in place, and contracts in place. Make sure your taxes are filed consistently, you have consistently produced financial statements, you are operating with the appropriate permits and you have long term contracts documented. If you don't, the business value will be discounted accordingly or it may prevent the sale.
4. Remove yourself from the business. In the beginning you were probably the hub of the business. You were the center of knowledge and decision maker. If that is the case when you try to sell your business, expect to take a heavy discount or possibly not selling your business. Buyers of businesses small and large are very sensitive to the role of the owner in the business. If you can't be replaced then the business is worth much less without you. 

 The steps taken in the 2-3 years prior to a business sale will affect the business value significantly and an exit is unfamiliar territory for most business owners. When you consider this and the fact that most business owners have most of their retirement assets tied up in their business, professional business exit advisory is usually appropriate.

 If you want to more information on this and learn how we help business owners with important challenges follow Cross NW on LinkedIn, like us on FaceBook, visit our web site, or email us: [email protected].

 Damon Pistulka is Managing Partner - COMSH (Chief of Making Shit Happen) for Cross NW. 

 Cross NW helps companies grow and dominate the markets they serve so ownership can realize the highest returns possible. Our results speak for themselves.

  Sales Acceleration | Business Advisory | Business Sales | Valuations