When business owners first think about selling their business, they are often offered far less than they expect. You should first compare the relationship between the receivables and the payables. The greater the ratio (receivables/payables), the better. Are there any major liabilities to consider and is the building owned by the seller?
Why do many business owners find out their business is worth less than they thought? It is important to take care of the intangibles. For example, they should have a database of its customers. Programs like QuickBooks include vital information such as customer contacts, customer emails and other vital information in the customer master. The importance of customer profiles cannot be understated.
The products customers bought, frequency of those purchases and reminders at the time of reordering is information that should be collected for prospects. Failure to do so could cause large numbers of interested customers to pass through the owner’s hands over the years. Quotes or callbacks from salesmen should be stored. Besides being stored, this type of information should be updated.
Buyers of businesses are looking for more than cash, receivables and inventory. They would be willing to pay a lot more for solid intangibles. A thorough and accurate customer database would bring even more value to the seller.
Many times, the sellers feel that the completion of the sale is the signal for them to disassociate themselves from their former business. Without the seller staying for a few years to ensure a successful transition, the value of the acquisition can quickly decline. A potential buyer of qa small company rarely buys unless they intend to bring the existing management on for some time. Any buyer would have second thoughts if they knew the seller had plans to leave immediately upon the completion of the sale. The selling process continues even after the seller no longer is the owner. They would have to stay for a while. This would maximize the value of the assets sold.
The owners may have long term relationships with their customers. Their presence can affect the decision to remain a customer of the buyer. Otherwise, customers can jump to a competitor without recourse. The departure of key employees could seriously affect the future success of the buyer. We can help you take the necessary steps to enhance the value of your business.