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SELLING YOUR BUSINESS - 4 TIPS to improve valuation

Posted by Richard Ludlow

Tue, Nov 23, 2010 @04:08 PM

 

 BALANCE SHEET and PROFIT & LOSS STATEMENTS
 

  1. 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!)
  2. If there are different income streams from separate operations, record them individually so performance can be tracked.
  3. 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.
  4. 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


Topics: Selling your business, selling business action plan