Sell a business in 2023
I’m receiving a lot of requests for business purchases and sales these days. When it comes to helping, there are many people who are too focused on running a business, and aren't prepared at all in case they sell. So, to help those people, I'm going to write a blog about business as well.
Of course, to sell your business smartly, you need to maximize the value of the business you are selling and then list it. Many people think that the value of a business is equal to Gross Revenue. There is a chance that the value of the business will increase if the Gross Revenue is high, but this is not necessarily the case. Therefore, if you set the sales period in advance and raise the value of your business through steady preparation during that time, you will be able to sell it at a good price.
So first, let's look at the preparation process through the big picture.
1. Identify in advance the points to be supplemented in the current business.
Of course, the purpose is to increase the value of your business. In other words, from a buyer's point of view, identify which parts they will be hesitant to purchase about this business. Everything is included. For example, the interior is too old, or the surrounding buildings are abandoned. And among them, supplement all the parts that can be supplemented by investing little money or time.
2. Look at financials and focus on how to increase the number of pieces buyers will love.
Usually, if you ask people who sell businesses to show you the financials, there are many cases where you only have a tax report. Moreover, the tax report does not include cash transactions, so in most cases the actual owner only has such a small report. In the meantime, as a rule of thumb, the owner says how much is the gross and how much is the net.
Unfortunately, today's business buyers don't risk their lives investing big bucks with that guesswork. Therefore, financials really need to preview the business as specifically as possible. The minimum documents that those who sell a business must take care of are the following.
Last year P&L (Profit & Loss) and last 12 months P&L
Employee working schedule
Employee payment plan
And while looking at these documents, you should do your best to minimize the cost and maximize the net that the actual owner takes.
*Among those who say how much Net is, there are some who do not include their own labor costs, but this is not an accurate Net. Under the condition that the business owner visits once a week or once a month to collect money, the money the owner takes is Net. So, if you haven't included your hours in your cost, be sure to include this as well*
3. You should think ahead about your plans after selling your business.
If the business is sold, there may be a share of money right away, but the household's source of income will disappear. So, after you sell your business, you need to plan how you will generate income. When a lot of money comes in, I think I can share it well, but when I look at the people around me, it's not as easy as it sounds. Therefore, I recommend that you make a solid plan before selling your current business.
I will continue to share blog posts related to business from time to time.
Residential, commercial, business, etc. If you have any questions or need help, please feel free to contact me.
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