It is smart to think ahead and get an estimate of what your business is worth today. I find that many business owners are very surprised to hear what their business is really worth at the last minute, with no time left to maneuver. At that point, they are stuck and in a pickle. If you look into this now, you’ll be in a stronger position to sell — with time to improve that information.
Most business brokers/intermediaries don’t charge to provide an evaluation to establish the value of the business today; I know I don’t. By knowing the basis for the value of your business now, you will know what you must do to ensure you achieve the price you want when it comes time to sell. Having this information two or three years beforehand can be valuable to ensure reaching your goal. Even making changes in the year you plan to sell can have a major impact if it is early enough in the year.
Many business owners get confused between the price they want to receive and what the market says a business is worth. These are similar, but very different.
Among the common factors that reduce value is not having “clean” financial statements. As it comes time to sell, you want to show every dollar of sales and minimize non-business expenses. This will increase your profit and the value of your business much more than the money you would have saved in taxes. Pay the taxes on the increased profits — those increased profits will be worth much more to you in the sale price of your business.
Whether you’re a seller or a buyer, if you would like a confidential conversation about how to prepare, contact me on my cell, 954-579-4687, or by e-mail at firstname.lastname@example.org. My LinkedIn profile is at http://www.linkedin.com/in/dolansales.