By Mark Tepper, the president of Strategic Wealth Partners and an EO Cleveland member
Owning a business can be a lot like falling in love for the first time: You see what you want to see. The disorganized files? That’s just a fun quirk! The fly-by-the-seat-of-your-pants attitude and the lack of an owner’s manual? No biggie; I like it that way!
However, in order to sell your business for maximum profit, it’s imperative that you start looking at your company from the buyer’s point of view.
Here are five of the best ways you can view your business from the outside in:
Start Seeing Your Company as an Investment
Stop thinking of your company as a pet project or a job. Buyers aren’t looking at your business because they need a new bullet point on their resumes. They want your business because it’s predictable, profitable, and will increase in value over the long term.
Take a Critical View of Your Own Involvement
Write down all your day-to-day activities. Are making coffee in the morning and locking up at night on your list? They shouldn’t be. A buyer doesn’t want to see that kind of involvement from the owner. Start delegating all your administrative tasks. The less involved you are in the business’s daily operations, the better.
Find the Fat
Get serious about trimming the fat from expenditures. Take a discerning eye to travel budgets, benefits, training, and gifts. Knowing where your weak points are in terms of spending will give you insight into what an outside buyer will see.
Take a Hard Look at Financials
Your books will be pored over during the sales process. Can you handle that? How is your organizational system? Perform an internal audit using generally accepted accounting principles (GAAP) to correct problems that might cause you to overstate earnings. The audit should also help you find ways to improve cash flow, manage debt, and reduce expenses.
Take Stock of Your Clients
While you might love the fact that it takes one round of golf with an old friend to bring in 25 percent of the year’s revenue, a buyer most definitely will not. What happens if that client leaves after you do? If you don’t have enough diversity in your client roster, a buyer will be turned off by the risk that situation poses.
If you’re considering selling your business at some point in the future, it’s time to throw out the rose-colored glasses and to get critical with the way you see your business. Take the five steps above to adopt a buyer’s point of view and start making your business more saleable immediately.