If you own a business, chances are good you’ll sell it at some point. But don’t wait until then to prepare. Instead, consider running your business as if you might sell it at any minute rather than years down the road.
When you want to sell a business, what do you do? Make it as attractive to a buyer as possible. What makes a business attractive also makes it efficient and profitable and managing it this way all the time is simply good business. Here’s how:
* Fix up infrastructure. Repair equipment or buildings, and dress up displays. Visual appeal is important to customers as well as buyers.
* Manage your borrowing. Talk with your accountant about your debt load. Excessive debt can signal a potential buyer that your business isn’t successful; it should signal the same thing to you. Reduce debt where you can, but don’t be afraid of borrowing if you need to finance inventory you anticipate will sell quickly. Make sure the interest on this kind of debt doesn’t eliminate profit from the sales.
* Formulate a business succession plan. Work with a financial consultant to plan for what will happen your business in the event of your death. You can even make arrangements with a competitor to buy the business for a predetermined amount, using proceeds from a life insurance policy.
* Develop a strong marketing plan. A prospective buyer will want to review your strategy for increasing sales, so hire a marketing or business consultant to help create that strategy. This kind of planning will increase sales now, long before you decide to sell.
* Examine employment issues. A buyer wouldn’t tolerate an employee who consistently underperforms, so why should you? Make sure you’re employing the best people for the job.
When you run your business as if you will sell it sooner rather than later, you’re running it with accountability, a technique that only can improve your bottom line. Larry Waller is president of Waller Financial Planning Group. Reach him at (614) 457-7026 or at [email protected]