Create Strong Financial Controls and Processes
Think about ways to maximize profitability and demonstrate higher earnings prior to selling the business. Even if it takes a year. Focus on achieving operational efficiencies, cost reductions, and increase profit centers.
Take time to understand your business operations; look at profitability from an objective standpoint. Reliable financial statements and accurate timely reporting will influence a buyer’s decision. Presenting with solid cash flows, strong management teams, and lower capital expenditure requirements will position your business as an attractive purchase.
- - Push for new business to boost sales leading up to the sale of your business
- - Confirm all licenses, recipes, etc. are in writing
- - If applicable, verify all product patents are in place
- - Document and support customized software
- - Check if favorable terms are in place with suppliers
Action Plan for your Employees
It is important that you manage this process and treat all employees fairly and reasonably to avoid any potential personal grievance claim. Look to involve main personnel as they are likely to be important in the transition and contribute to the future success of the business; identify who and what is involved.
- - Check all accounts for accuracy and verify they reflect a well-run and profitable business
- - Get your financials reviewed (or bettered compiled) by your CPA
- - Identify personal financial benefits for the past two years.
- - Be able to highlight and explain any unusual items
- - Provide the last 2-3 years P&L that reflects sales and profits (buyers will request these).
Show Cash Flow
- - Minimize expenses and eliminate any shrinkage
- - Fine tune the sale processes and close outstanding sales opportunities
- - Formalize all leases
- - Formalize agency/sales and distribution agreements
- - Resolve any legal and accounting disputes
- - If applicable, address environmental issues
- - Gather your legal documents and corporate records
- - Assemble your key historical metrics (success of converting quotes to orders, sales pipeline, marketing effectiveness, production schedules, vendor lead-times) and market data (potential market, competition)
- - Document your operations - this will let the buyers understand how the company operates and it will help you train your new employees as well