To increase the likely sale price of your business, you should enhance the factors that go into determining a business’ sales price. For example, the primary driver of the sale price of a business is what is called the Seller’s Discretionary Earnings (SDE). SDE can be thought of as the net profit of the business adjusted for factors like depreciation, other owner benefits, and the owner’s pay. To increase the likely sales price of your business, you will want to maximize SDE by increasing revenues and decreasing expenses. You also want to ensure that your books fully and accurately reflect your profits.
Our free consultation can help you understand the market value of your business and help you evaluate strategies to increase the sales price of your business.
As you look at your business with intent to increase revenues and decrease expenses, are there any small tasks that could affect your net profits favorably? For example, could you do an advertising promotion to increase the level of your business? Could you renegotiate a contract with the supplier to reduce your costs? These changes, which may appear small, can increase the value of your business.
When you sell your business, the buyer will want to know that relationships are excellent with current suppliers and customers. You should look ahead to the sale of your business to make sure that these relationships are transferable and that your business is minimally dependent on you personally. This will give a potential buyer of your business confidence that he or she can depend in the future on the revenue stream that you have built.
You will also want to ensure that your business presents itself as well as possible to any potential buyer. You want your business environment to be neat, clean, and inviting. Look with a critical eye around your business; are there things cluttering your business that will have no value to a potential buyer? If so, toss them!
Broker: Jim Sutton, BRE #01477040
Phone : 408.940.4579
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