17 Oct Around the Web: A Week in Summary
A recent article from Inc.com entitled “Common Financial Mistakes Business Owners Make Before a Sale – and How to Fix them” explains how three simple mistakes that are commonly thought of as harmless can wreak havoc on your business’s salability.
Buyers are looking for a business that will promise a return on their investment. This means that having complete and transparent financial records will attract more buyers and make for a smoother sale. Common mistakes that business owners make are:
- Tampering with inventory reports: Overreporting or underreporting inventory stock can lead to owners misreporting their taxable income. Rather than minimizing taxes, artificially lowering inventory can cause tax issues at year end.
- Not using a professional bookkeeper or system: Without proper bookkeeping, it is difficult to get a good understanding of the earning potential of a business.
- Failure to report cash sales: Trying to avoid paying income taxes by not reporting cash sales can lower your reportable revenue. When it comes to selling your business, this is going to hurt your salable value more than paying the taxes would have hurt your bottom line.
Well-kept books can also help prospective buyers qualify for a small business administration loan, which can increase the number of prospective buyers. Right now, the market is especially favorable for those looking to exit. Cleaning up your financials can make that exit easier.
A recent blog post from VR Business Brokers entitled “Separating Yourself from the Market” highlights five different elements that will help your business stand out in the market. These elements are:
- Creating new markets
- Providing elements that inspire excitement and intrigue
- Focusing on specified markets
- Employee-driven value
Today’s market can be very competitive. Make your company stand out from the rest by focusing on these few key aspects that are sure to get people’s attention.
A recent article from Forbes entitled “How Seller Diligence Maximizes Business Value” explains how owners can positively influence the value of their business and increase their chances of completing a sale by being proactive and understanding what drives a business’s value.
Business profits and growth potential are two obvious factors that contribute to the value of your business. What can drastically increase value of your business, and is often overlooked by owners, is eliminating risk and increasing quality. Some of the most critical ways an owner can do this are:
- Taking steps to increase employee loyalty, effectiveness and capability
- Following protocols to ensure quality, complete financials
- Using technology to increase information security and efficiency of operations
Even if you’re not actively looking to take your company to market, you never know when a pre-emptive buyer will come along and make an offer. Don’t wait to improve your operations or clean up the company’s finances until you’re ready to list your business. It could cost you the deal of a lifetime.