posted by Brenda the Broker on 03. Feb, 2012

When you decide to sell your business, your goal is to maximize the value of your business sale. You have invested your time and hard work in building the business and you want to bring in top dollar from the transaction. The best thing to do once you have decided to sell your business is to start planning as early as you can. There are a number of things you can do to increase the value of your business before you start the business sale process.

Here are a few things you can do to increase the value of your business sale:

1. Improve Your Cash Flow

The start of the business sale process can be a challenging and stressful time period. You are already working hard to manage your business and you are starting to accept offers from prospective buyers. Remember, most prospective buyers are going to need a loan to purchase your business and the business’ profits will be a major factor in determining monthly rates for the loan. You have to do everything you can to maximize your profits and cash flow so you can increase the value of your business in the eyes of the investor.

2. Increase Your Sales

Your goal is to prove to the prospective buyer that your business is going to make them more money in the future once they buy the business. The best way to do that is to present a trend of increases sales and revenue, so its really important to continue improving your sales figures in the years, months, and days leading up to your business sale. The increase in the number of sales will help influence your prospective buyers to increase the bidding price for your business.

3. Setup Your Automation

A successful business with proven potential for growth is attractive to a prospective business buyer. A successful with proven potential for growth and has established automated business processes is even more attractive to a prospective buyer. An investor is going to be willing to spend more on an automated business rather than one which is going to require a greater degree of manual labor and involvement. Start establishing automated business practices and business systems before the business sale process to increase the potential return on investment and increase the value of the sale for you.

4. Leave Your Business

While you want to be involved with the business sale process, the less involved you are with managing the business the more confident the buyer can be that it can be successful without you. As the business seller, you want to demonstrate to the buyer that the people you have empowered to manage your business can do it successfully independently. The greater the buyer’s confidence, the greater the potential selling price will be.

5. Organize Your Paperwork

Your financial records, legal paperwork, and responsibilities are part of the overall presentation of your business’ professionalism and efficiency. The better you can communicate your business’ history and where you are today, the better the investor can project the future vision and potential of your business once they have made the purchase. It is best to prepare all of the paperwork and documentation before the start of the business sale so it is ready for a prospective buyer to review right away.