Retiring business owners want to get the highest profits from the sale of their business. When deciding to sell, the owner must decide if they want to shut down the business or sell it to a new owner to operate and generate profits. If the owner created a product and has a patent, they must decide if they want to retain rights or sign the patent over to a new owner. A broker could help with these decisions and ensure the owner gets the most from these investments.
Increase the Profitability of the Organization
Business buyers want organizations that are profitable and give them an almost immediate revenue source. Well-established companies that continue to generate profits are more appealing to buyers. When selling a company, the owner must ensure the profits continue as a new owner takes over. Most companies have product lines that are profitable and new releases that offer additional sources of income. As buyers review the business for sale, they want to find steady growth and profitability, or the business is not a sound investment. To learn more about buying profitable companies, click here for more details.
Streamline Operational Processes
Source: smartsheet.com
Automated operational processes save time and money, and businesses need more opportunities for savings. Buyers assess the business according to the operational costs and whether the business has implemented safe automated operations.
Organizations that overspend on staffing generate steady losses, and until they implement more automated processes for completing tasks, the companies continue to overburden workers and spend too much money each year. Streamlined operational processes that involve automation reduce the workforce and operational or overhead costs for the owner. Fewer costs help new owners generate fast profits and avoid unnecessary spending.
Build a Loyal and Dedicated Workforce
Loyalty among a dedicated workforce shows prospective buyers that the owner is managing their workforce appropriately. Businesses that are filled with unhappy workers are not great investments, and the buyer might face higher turnover because of job dissatisfaction. Investors don’t want to choose a company that might fail because its workers are overworked, under-compensated, or ignored by management. The owner must take steps to build a reliable and dedicated workforce where all workers are happy with their job and how they are treated within the organization.
Identify and Valuate All Company Assets
Business owners catalog all assets owned by the organization and present this list to the broker. The value of each asset defines how much the owner could generate from the sale of their business. Companies have two options when selling their business. They can either sell the entire company as a whole or sell assets separately. A broker appraises the business based on these two options and presents these calculations to the business owner, and the owner decides which option will be the most profitable. If the owner isn’t shutting down their organization, they sell the company as a whole.
Manage Debts and Organize Active Invoices
Source: paulpickering.com
Companies that are in the red at the time of the sale leave the new owner with considerable debts. In the years leading up to the sale, the owner must create a plan to settle their debts and restore the profitability of the company. Businesses that are active and profitable are more appealing to buyers than a company that is swimming in debt.
The financial details about the business define if a new owner can expect profits when taking over or if the profits go toward servicing debts. Many investors purchase companies and pay off the debt to restore profitability and make the business more successful. However, the organization must have financial records that show steady incoming proceeds before an investor takes on high debt.
Assess Your Company From the Buyer’s Viewpoint
Approaching a sale from the buyer’s viewpoint shows the owner how to present the business to a potential buyer. Anyone interested in a business wants at least the last three years of financial records, and they want to review details about all products the company sells. Buyers cannot see explicit customer data, but they can review totals for each month and determine how many customers the company has who buy products regularly. A solid client base is critical to the success of all businesses.
Create An Exit Strategy
An exit strategy is a must-have when selling a company, and there should be a smooth transition from one owner to the next. Workers must trust the new owner, and supervisors should be encouraged to stay with the company. If a business owner introduces new processes and managers to the staff, workers may or may not remain with the organization. The seller must choose a date on which they will stop running the business and hand over the reins to the new owner, and they must stick to this exit strategy.
Source: allbusiness.com
Consider How COVID-19 Effects the Company
Companies such as retail stores mitigate risks related to the COVID-19 virus, and when selling a company, the owner must have policies in place to protect customers and visitors from the virus. Exposure to COVID-19 presents liabilities for business owners, and a new owner needs safety measures in place to protect everyone, including the workers. Buyers assess how they mitigates these risks and protect customers and workers before considering the acquisition. A company with a history of lawsuits because of COVID-19 isn’t a great choice for buyers and presents immediate liabilities and risks.
Business sales give owners a chance to sell the organization to another party and generate a profit for retirement. Brokers help owners decide what to do when placing their business on the market and retiring. The sales require financial records that show incoming profits for the last three years and a sound investment opportunity for the new owner. Company owners must set up an exit strategy if the business continues to operate, and the new owner takes over on the projected date. Learn more about selling and generating the highest profits by talking to a broker about the company.
