16 Sep Around the Web: A Week in Summary
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A recent article from Forbes entitled “One Action To Take Before You Sell Your Business” discusses financial implications when it comes to selling a business. Many business owners want to price the business based on how much money they need or how much they think it is worth. However these numbers don’t always align with the actual value of the business.
When priced incorrectly, a business may take much longer to sell or not sell at all. To avoid this pitfall, it is wise to create a financial plan that encompasses the business and personal assets. This helps identify what the owner actually has. They can then identify how much they need post-sale and see if the numbers match up. If not, they have some work to do before selling.
A business valuation will identify the true market value of the business, meaning how much it would realistically sell for. This is a key step in the financial plan. It is also important to consider tax implications.
A recent article from Entrepreneur entitled “Ready to Sell Your Business? Increase Your Company’s Enterprise Value to Make a Greater Profit” explores how to make your business worth more so that you can sell it for more. By driving enterprise value, a business owner can maximize their return.
The first step is to establish a goal of how much you wish to sell for and when. Then it’s time to get to work by obtaining a business valuation to establish current value, developing and implementing a growth plan, and creating value that supports everyone. With greater enterprise value come greater options when you are ready to exit.
A recent article from Next Avenue entitled “The Importance of a Proper Business Exit Strategy” discusses why exit planning is so important to successfully transferring a business. Baby boomers are nearing retirement and that means there is a flood of businesses coming to the market that will need to be transferred. However there are less people in the next generation to potentially buy these businesses.
Business owners can put themselves in a better position to succeed in their exit by planning well in advance. Developing an exit strategy gives a business owner more control over what happens to their business and when. Proper exit planning typically starts with a business valuation to get a sense of where the business stands today in terms of value. Then the owner can plan from there to get to where they want to be.
Common exit options include remaining as chair of the board and handing day-to-day operations to the management team, transferring ownership to an internal party, and selling to a third party.