BALANCE SHEET and PROFIT & LOSS STATEMENTS
- Record ALL business income on the books – (any tax impact is many times LESS than the GAIN you will get from the increase in the sale price of the business!)
- If there are different income streams from separate operations, record them individually so performance can be tracked.
- Detail and describe all expenses. The SBA allows certain discretional expenses [cell phone, car use, bundled insurance, conference travel, etc] to be added back when calculating income. Documentation of these “Add-Backs” to improve profitability will be a big help justifying a higher “Cash-Flow” number.
- Improve internal business efficiency (focus on reducing costs)
- increase inventory turns by eliminating obsolete inventory
- examine each expense line, consider cheaper alternatives and/or elimination (including personnel)
- chase outstanding receivables.
Its best to start with early planning, when selling your business.
By Richard Ludlow, Partner