Enhance Your Chances of Selling Your Business



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the sale often does not happen. If a sale motivated by money does go through, it often takes a long time to sell, and frequently sells for a price significantly lower than what the owner hoped.
"When people try to sell for financial reasons they are almost always unrealistic about the worth of their company," says Jim Salvarakis, a lecturer on the topic of selling a business, and president of the brokerage company Connecticut Business investments, Inc. in Southport, CT. "Their price is not related to the marketplace because they have doubled the worth or more and the marketplace will just not net them that."

Don't let your books work against you
It is not news that many small business owners keep poor books and records, and these record keeping habits can be problematic when a business is for sale. For example, in a cash-based business, owners pocketing money instead of recording it on the books may find themselves forced to sell a business based on what is recorded, not what is actually made. This means that your business could be worth much more than you will be able to get for it.
To avoid this trap, plan ahead and have at least one full year of reported records before you try to sell. The latest 12-month results are the primary factor when a buyer is evaluating a business because purchasers are most concerned with what the business is doing currently. However, 2 or 3 years reflecting your full potential are preferable because they will help reassure a buyer that your business is worth what you are asking.
If you need to sell right away there are other ways you can prove to a buyer that you are doing more business than your books reveal. A buyer can evaluate your consumption of supplies and products. For example, a potential purchaser can look at a Laundromat?s water consumption or a pizza parlor?s flour purchases. There are a number of problems with this route -- it takes more time; a buyer may not want to dig for this information; opening up your business this way means that the IRS may also get wind of the fact that you are not reporting all of your income; and if you are not honest with the IRS, a buyer may wonder if you?re being up front about the business you are selling.


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