Thinking of Selling Your Business? Step 1

As the economy begins its slow, many Americans are now examining what steps they can and should take to improve their financial position. The past two years have been difficult for most of us including owners of small and medium sized businesses who have been challenged as never before.

Recession Survival

But a challenging environment can also work to your advantage if you are a business owner. Specifically, by staying in business you have clearly demonstrated that your enterprise can survive a deep downturn, unlike some of your competitors who closed up shop or curtailed their operations.

If this is your story then kudos to you! Despite losing business, freezing or cutting salaries, laying off employees and watching corporations get bailed out while you struggled, you have managed to keep your head above water. But what if you’re ready to sell? How can you make that work to your advantage as the economy begins to mend?

Sale Preparation

Under normal circumstances the advice you might receive from a business broker could include telling you to reflect a clear “up trend” before offering your business for sale. But if you were to apply that advice to where the economy is today, then you would have to work at least two more years before your business might show some important gains.

Clearly, 2008 and 2009 were not good years perhaps to the point where your balance sheet was completely off balance. If you were to market your business based on recent data, you might find interest to be low and the offers dismal.

Instead, you may want to focus on the following recommendations when prepping your business for sale:

• Get rid of excess inventory – Likely, you already trimmed your inventory significantly over the past 12-24 months. In any event, determine whether your current inventory reflects your business needs over the next 3-6 months.
  
  
• Dump debt – When your income drops, tackling debt gets pushed to the back burner. However, if your business has shown an uptick over the past few months, then redirecting some of that revenue to paying down debt makes much more sense than hiring new employees at least right now.
  
  
• Straighten out receivables – Are your customers paying you on time? Attempt to bring people up to date while considering writing off bad debt for those who cannot pay.
  
  
• Review your credit – How has your company’s credit held up over the past few years? If your credit has been battered, then it may take some time to fix it. Consider making important tweaks first before putting your business on the market immediately.
  
  
• Take care of complaints – The Better Business Bureau, state office of the Attorney General, or other consumer advocacy group may feature information about your business. Take care of complaints against your company and ask the respective agencies and organizations to update their information accordingly. This may include a note in your file explaining that the matter has been resolved.

Business Marketing

By taking care of business before you sell your business you can ensure that you attract buyers who won’t be looking for you to discount your price further. You’ve put a lot of work into you business and have demonstrated that it can survive a recession, an important intangible asset worth noting.