Selling My Business: How Focused Should I Be on Profitability?
Oct. 5, 2014
When you’ve made the decision to sell your business, there are quite a few things that need to be done in order to maximize your selling price. Most of them revolve around making the decision as easy as possible for your prospective buyer, and chief among those is making your business look as profitable as possible.
Now, it’s not uncommon for individuals with their own startup business to funnel certain personal expenses through the business, or to include certain discretionary expenses, but that is one of the first things that should slow down or stop once you have made the decision to sell.
You want your business to seem as lean and lithe as possible, and since profitability is the most important factor for an interested buyer, cutting out small fees can add up to a big difference over time. A good rule to follow is that a buyer will want to see 2 years of financial records, and if you can show profitability (and optimally, growth) over a 2-year period, with some repeat and loyal customers, you shouldn’t have too hard a time finding someone to make a reasonable offer on your business.
Going along with profitability, if your business is in need of a little fixing up, it is very important that you do the fixing yourself, even if they’re realistically inconsequential fixes. It can be very similar to selling a house, where walls that need nothing more than a fresh coat of paint can scare away buyers, or get you low-ball offers.
The road to streamlined profitability can undeniably be a long one, but the sooner you can start taking steps, the better. The value of your business sale might depend on it.
Obviously, if you ever have questions about buying or selling a business, please get in touch with a skilled business attorney today. They will be able to look at your particular case, and offer qualified advice based on their experience.