Small Business

Selling Your Company: 5 Ways to Increase Your Company's Value

Posted by Factor Funding Co. on August 25, 2014

Increase Your Companys Value

Business owners who want to sell their companies may wonder what they can do to make their businesses as attractive and lucrative as possible to potential buyers. In fact, buyers, just like everyday consumers, want to know that they will get a good return for their capital and that they will make a sound investment that will not end up costing them more worry and money than they can afford. When you are ready to put your business up for sale, you can ensure a fast and satisfying transaction by preparing your company and getting it ready for selling. You use these five strategies to make your business appealing and attractive to potential buyers.

1) Resolve Debt and Leases

People who make a living out of buying companies rarely want to take on a company that has an overload of debt or outstanding leases. Knowing that your business is owed significant amounts of money from lease holders or that your business owes its creditors a large amount of cash can be a turn off for otherwise interested buyers. Before you put your business up for sale, you should collect on your debts or settle them if you must. Likewise, you should allow your leases to expire before you put your business on the market.

2) Manage Your Financial Statements

Buyers interested in your company want to know its financial forecast and understand whether or not it is a money maker in every sense of the word. Before you sell your business, you should take care of your company's financial statements, make sure the numbers add up and make sense, and provide a clear forecast for what you predict to be its financial future. When they can foresee that they can make money and get a return on their investment, buyers will be more likely to purchase your business.

3) Recruit and Hire Effective Managers

It is vital that buyers know that your company will continue to run smoothly and profitably once you are out of the picture. When you recruit and hire a well-trained, experienced and effective management team, you can show people interested in your company that, once you are gone from the daily operations, your team will provide the seamless and worry-free transition needed to keep the money coming into the company. Having this team in place before you sell can attract more buyers.

4) Diversify Your Client Base

Having a client base that only provides one or two sources of income can be a real detriment to the sale of your company. Buyers want to know that money will be coming in from different sources, including private clients and government contracts. Before you sell, you should diversify your client base and attract more customers to your company. Once you have established a varied and reliable base, you can then put your company up for sale.

5) Take Yourself out of the Business

Little by little, you should take yourself out of the everyday operations of your company. You should let your management team step up and take your place gradually until you can effectively remove yourself without any significant troubles occurring. Buyers rarely want to purchase a company that has a heavy-handed owner. They typically will want you out of the picture before or shortly after they purchase your business. You can demonstrate your hands-off approach by giving your managers the opportunity to act in your stead and by removing yourself from the daily occurrences that once tied-up most of your time. Once they see that you are truly removed from the bigger picture, buyers may be more likely to acquire your company.

Attracting buyers quickly can be a priority when you want to sell your business. You can sell your company and ensure a satisfying transaction by using these methods to prepare your company for sale.

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Written by Factor Funding Co.

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