When you sell your house, you give it a coat of paint, perhaps hire a home “stager” who will help you show your house at its best. It’s even more important when you sell your business. Preparation can take months or even years. A buyer will want to see a good track record of earnings before paying top dollar. Specific issues include:
- Management/Operations: Do you delegate? Can you take a two-month holiday? Will your business still exist when you get back? If the answers are no, it will be hard to sell or even transition your business to your children.
- Financial: Ensure your bottom line is healthy. Your business is valued based on a multiple of sustainable income. You need to prove your business makes a good profit, and that it is sustainable.
- Taxes: We all hate them, but did you know paying a dollar in tax could earn you $15? Here’s how: If you are paying for personal expenses through your business (nudge, nudge), you save perhaps 20-30% tax. When you sell, you sell for a multiple of your bottom line. So paying for five dollars in personal expenses saves you one dollar in tax, but could cost you $15 when you sell (assume a 3x multiple). Strange but true. So, as they say, “honesty is the best policy.”
Need more information? Call us at 204-478-7266, ext. 110. or click
https://www.bealbusinessbrokers.ca/selling-your-business/ to download our free e-book on selling a business.