Monday, December 5, 2016

Sell Your Business for MORE With These Steps

The present value of your business is based on a few components. I will quickly glance over some but want to get into preparing your business to sell so I will be very brief. If there is enough interest I will have a friend in the business post as well and possibly speak at one of our seminars sponsored by elleven marketing group. If you are really serious about selling your company then you will want to have a valuation done on your company. We have friends that will do this for free for smaller businesses so don't pay for a business valuation unless you absolutely have to. That being said, assets are an obvious part of the value of your company. Buildings, inventory, equipment...everything on your balance sheet. (If you don't have a good set of books, your company will be difficult to sell) But outside the obvious, the real value the prospective buyer looks at is...Expected Future Earnings.

So what is "Expected Future Earnings" worth? Well, that depends on factors such as how predicable the earnings are, how long the projected sales will be sustained, level of risk, size of existing company, anticipated earnings from growth, etc. 

Revenue is a strong indicator, but profitability goes hand in hand with it. don't let anyone tell you differently. With revenue say your company sells $100, 000 per year, that is basically a $100, 000 per year revenue stream. Quite often businesses are valued on a multiple of revenue. The multiple generally depends on the industry so you may need help with that. But so you know what you are talking about, multiplied by two is called a "two times sale", by one is called a "one times sale" etc. 

This multiplier is heavily altered by profitability. A company could do $3 Billion in annual sales, so would it be worth $3 Billion? Obviously not. 

So what are the factors you can work on first to most dramatically increase the value of your business? That's right, revenue and profitability. This is where a SWOT analysis is vital. If you haven't already had one. Our team will do one free of charge. Again, elleven marketing group changes zero dollars for this service. It identifies Strengths, Weaknesses, Opportunities and Threats. Then we know what strategy you will need to put in place to bring up your revenue and profitability. Don't call a broker until you have a plan and know where you are going. Most won't give you the time of day. If they do, you will most likely not get as much for your company as you would otherwise. It is better to sell a remodeled house that operates well and it is better to sell a remodeled business. 

Written by Samuel Sadler of elleven marketing group 

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