Tip #4
Burying Personal Expenses and Assets in the Business Financials 

Minimizing tax liability is a strategy all business owners think about. But when it comes time to obtain financing or sell the business, buried personal expenses and assets can create a problem in determining the true cash flow.  Buyers and bankers won't always give credit to many of these items. As a result, the cash flow can be suspect. And when you apply a multiplier to determine the value of the business, the results can be disappointing. It is in the best interest of a business owner to show a healthy bottom line in the years preceding the sale of their business to get the highest price possible.

Tip #5
Business Owners Who Do It All!

Some businesses can’t survive without the owners trying to do everything themselves. And they have no key employees to help manage the operations. Buyers for businesses like these may be concerned if they themselves can’t replace the skills and experience of the owner. As a result, these businesses may have very little value to anyone else. Business owners who don’t delegate need to make a strong effort to have experienced key people in place before they ever try to sell their companies.

Tip #6
Business Owners Who Are Afraid to Raise Prices! 

Good profit margins are what it is all about.  Too many business owners are scared to death to raise prices for fear of losing customers.  In many cases, competition does make it difficult. But there are many situations if business owners would do some research, they would find out there isn't as much resistance as they thought. And when they finally raise prices, they find out they lose very few customers and make a lot more money (also increasing the value of the business).  Don't wait too long.  Business owners should check out their competition, warn their customers in advance and then raise prices in an orderly fashion that makes good business sense.

Tip #7
Understating Inventory

Reporting a lower inventory to their accountant is something many business owners have been doing for a long time.  And many accountants just accept the number.  In addition to the obvious concerns, when it comes to selling the business, big problems can arise.  How will the inventory be valued in the Purchase Allocations?  And who is going to have to pay the various taxes on the larger amount?  Business owners should give their accountants an accurate inventory value each year to avoid troubles at the closing table!

Tip #8
Realistic Expectations of Value for the Business

Unfortunately, most business owners have a very inflated view of the value of their company.  And why not?  They have put so much money, time and heart into it.  But they need to realize the price is based on what someone else is willing to pay for it.  Periodically having an evaluation prepared by a professional is a good way to help determine what the business owner needs to do to reach his or her goals.

Tip #9
Business Owners should be planning for their own future.

Business owners are so busy running their companies every day, they never seem to have time to plan for exiting the business.  But they can’t avoid planning for this critical time in their lives. Presenting a business for sale is very different than managing it with the business owner’s personal management style and priorities.  It can take years to properly prepare a business for sale to get the highest. Business owners should start creating an exit strategy at the earliest possible opportunity!

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