Maximizing Business Value - What’s it worth?

As a business owner you may have enjoyed a few perquisites through the years, but chances are you also worked harder and carried a greater responsibility that nearly any employee. So, at the end of the proverbial day, what’s it worth?

- Is it worth the money you put into it?
- Is it worth the time you put into it?
- Is it worth what you earned 5 years ago when ‘the place was ‘really hopping’?

The sometimes harsh reality is that when you are ready to move on, your business is worth only what an identified buyer is ready, willing and able to pay for it. What that potential buyer is looking at might be very different than what you experience as an owner. Please consider these few points:

Financial – Most buyers consider only financial data that is well organized and easily verified. When all revenues and expenses are recorded on tax returns, the buyer’s accountants can work effectively as advisors and the value of the business is maximized. Only with well documented finances can the buyer and the buyer’s banker gain the confidence they need to approve a substantial sales price.

Employees – Your employees are probably the lifeblood of your business. When a business is sold, the new owners need to take over wherever the previous owner left off. If employees are used to unique, ad-hoc arrangements, the new owners will have a terrible time during the transition. Having up to date hiring processes, employment agreements, policies and procedures can help owners present the value of the employees in the best light.

Marketing – The systems you use for acquiring and maintaining clients is of great importance to buyers. They want to know that the success you have achieved as an owner has not been solely created by your unique personality. Clear records of past, present and future marketing materials, advertising schedules and response rates can help a potential buyer visualize how they can realize the same income that has been enjoyed by the seller.

All in all, if you think thru the process of buying another business yourself, you will better understand what you need to do yourself to maximize the value of your business. Joining the South Jersey Networking Group can help you ‘tune up’ your business. For more information about buying or selling businesses, please call me, Eric, the groups business broker:

Eric Lacquer
http://www.cbibusinesstransactions.com/