As a business owner, you might soon begin contemplating what it would look like to sell your business. Whether you have been in operations for a while or are relatively new to the market but feel like it’s time to move on, you would probably have your own solid reasons for wanting to sell your company. One of the most common questions presented to our knowledgeable business brokers is; does it matter when I choose to sell my company? Is now the right time to sell my business?
Common Reasons People Sell Their Businesses
Selling an online business gives you the opportunity to move on to other prospects. However, there are many different reasons why people approach the idea of selling their online business. Some of these include disputes, health, retirement, stress, burnout, relocation, trading up to a new opportunity or financial hardship. The best time to sell your business is when it is growing and profitable because this is the time when it will be most appealing to potential buyers.
How Do I Prove the Value of My Business?
In order to illustrate the value of your company, you must have accurate financial statements. Tax returns and income statements can help to illustrate the relative success of your business from a financial perspective. This shows a growth or a decline in each year and a consistent level of income. If a financial show recurring growth, this not only makes your company more appealing to buyers but makes your business worth more. If you have not shown all of your income in order to pay less in taxes, the business is worth less since the cash flow is lower. It might be a good idea if this is your situation to keep the business for another few years and then show all of your income.
Expenses can be added back to your bottom line, giving you a bigger cash flow and a better selling price. Onetime expenses, expenses that are not necessary for the operation of the business and personal expenses should all be evaluated carefully when trying to elevate the value of your company. Your online business broker like the professionals at Website Closers can help explain each of these to you and then assist you with putting these back on your cash flow statement. You must be able to prove add backs and having accurate financial books is one of the top priorities for someone thinking about buying a business.
What Does Inventory Have to Do with The Value of My Business?
Your inventory turnover can vary based on your type of business, but it is usually expected to be turned over in no longer than one year. Evaluations of businesses with big inventory that can’t regularly be turned over are a red flag to prospective buyers. Make sure that your inventory is manageable and require a large down payment when selling the company. Furthermore, what goes beyond inventory is your equipment. Ensure that all of the equipment in the business, if necessary, is in good working condition. If you have equipment, purchase agreements or vendor payments that have not been used for a long period of time, remove it.
Make sure that everything in your business stays as current as possible. Spending a little bit of time cleaning and getting things organized makes your business look especially inviting when choosing to sell your business to a new buyer. Discussing all of these concerns with an experienced and knowledgeable business broker can help you to articulate what is the most important aspect of listing your company for sale.
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