Increasing Value Without Increasing Profits.
Can you increase the value of your business without increasing its profits? Ask your accountant or other financial professional and chances are they will draw a blank. Or they will answer, “No.” But the trust is that you can, and the concept of how you do it is astoundingly simple: You increase the value of your business when you take the appropriate steps to attract your best Buyer.

To achieve the best end result, smart business owners approach the selling process with the same planning and discipline that they use in the day to day operation of their business. The following is an overview of the winning strategy you’ll need to follow to get the most out of your business sale.

The simple steps will increase the value of your business without increasing your bottom line:

Plan ahead. Smart business owners know that their business will either transfer or close. There is no alternative. Your company is a product. It will be treated as a prize to be won as a piece of distressed merchandise to be acquired at a bargain basement price. How a business is treated can often be traced back to the timeliness and appropriateness of the owner’s decision to sell.

Take stock of your business. You must step back and take a long, objective look at your business. Without objectivity your business cannot be packaged to attract a “Right Buyer” and command the “best price.”

Position your company to sell. A good definition of positioning is, “It’s not what you see what counts, but how you see it.” Buyers are looking for opportunity. Often this means stepping in to correct problems so that future profits can be gained. It’s just as important to know what’s wrong with your company, as it is to know what’s right. And of course knowing what’s right and wrong is just the start. You’ll need to effectively communicate this information to your potential buyers.

Identify the Right Buyer. If your company could benefit from strong marketing, then you should include in your Right Buyer’s profile significant strength in that area. If your company lacks customer service, then someone with special skills would be a good candidate for the buyer. Remember, not all buyers will pay the same amount for your business. There is one “Right Buyer.”

Set realistic price and terms. This doesn’t mean you should accept one cent less than your company is worth. But it does mean that unless you can confidently defend the piece and terms you set, you will lose the confidence of the Buyer and your sale price will suffer.

Refine your organization. You should take steps to ensure that your business doesn’t depend upon you for its survival and success. The best buyers are seeking a firm to manage and you should take steps now to develop a system for your business that can be effectively managed by the business’ employees and its new owners. Buyers don’t buy businesses when they see the current owner as indispensable.

Prepare your financial records. Comprehensive, professionally prepared financial records are a must if you want to attract Buyers willing to pay a premium for your business. Well-maintained records make Buyers think of you as a savvy operator. Solid financial records gently reduce the Buyer’s perception of risk.

Review your lease. Lease issues and landlords represent the biggest “deal killers” of all. Your lease provides you with a license to operate a business in a particular location. Without a lease your business may be of no value to a Buyer. Take the time to review your lease. It should provide for assignment and should be valid for a minimum of five years. If it’s not, renegotiate it before you start the sales process.

Obtain a third-party valuation. One of the most valuable tools at your disposal is a credible, third party business valuation that supports your asking price. Buyers are much more likely to pay top dollar for a business when documented evidence can be provided that supports the price they are willing to pay. And increasingly, sources of financing are insisting on a business valuation before they will even consider funding.

Prepare a business profile. You must provide information beyond the financial statements. Buying a business isn’t just a simple mathematical exercise involving the “numbers.” Smart Buyers want more. Customer concentrations; industry outlook; marketplace forecast; future influences from technology; industry margin comparisons; operating ratios analysis; stability of tenancy and much more. A comprehensive business profile that includes this type of information will greatly enhance your business’ prospects of selling for top dollar.

Assemble a team. Selling a business isn’t a “do it yourself” project. You should assemble your “team” early on. You will need marketplace, legal, and tax intermediary, attorney and tax accountant. Provident Group has the resources and experience to present your business in its most favorable light and to help you assemble a winning team.