What if you were the buyer of your business for sale? What would you look at to determine whether it is a great buy?
This is a great exercise to do prior to selling the business.
This is a checklist you might use:
Note: This list does not pass judgment at all on the proper answers to the questions but merely suggests you should know the answers and change those that should be changed, if you can. The list is not comprehensive but begins to steer you in a direction.
Can you show increasing revenue? If not why not and then see if you can turn this around before or during the sale process.
Know the percentages in each revenue category, specific to your business.
Do tax returns/submittals reflect revenue you claim? (In New Mexico, it is important to complete gross receipts taxes with the taxable and non-taxable revenue, not just taxable.)
Cost of Goods Sold & Inventory:
Is the percent of cost of goods/revenue consistent? If not, why not?
Is inventory consistent year to year and, if not, why?
Is the inventory current, not outdated?
How do you expense inventory…fifo, lifo or other?
Are there variations in expense lines from year to year and can you explain them?
Can you verify various personal expenses that you claim will not transfer to the new owner?
Is the percent of key expense lines/revenue consistent? If not, why not?
Tax returns: Make certain you have returns done and that they make sense. Are you certain of your service provider? It is better to have returns done by professionals and not your own. Buyers are more likely to trust those done by an outside firm.
Leases and contracts for goods and services: Are they up to date? Do you have signed copies? Do they allow transfer to new owners or not?
Records: When the buyer comes to your door, will she find the records (and all else) neat and tidy? Do you?
Where are you headed? Know what you would want to do for your business for sale. If you can proceed to do some of the things a new owner might do. You might have fun and likely will have a better opportunity of selling it.
Here are some tips about getting a business ready to sell: