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Why Planning Is Critical If You're Planning to Sell Your Business

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As a small-business owner of long standing, you should be rightly proud of your achievements. You've built up this organisation from scratch and have been able to retain customers over the long term, and you may have a certain amount of intellectual property associated with your efforts as well. While you may be earning a reasonable amount each year as you continue to operate, you may be starting to think about the future. You ought to be able to sell this business for quite a considerable sum, but this is not going to happen by itself, and you do need to make preparations if so.

Great Value in the Right Circumstances

There are a number of investors waiting in the wings who may be particularly interested in buying your business. They will view this as an ongoing concern, given the right circumstances, and will be prepared to pay you the market rate to compensate you for your efforts. For example, you may be able to raise four or five times the book value of the business as determined by its annual profit yield, and this can often represent a significant nest egg to use towards retirement.

Second-Tier Management

For you to be able to sell the business as a going concern, you need to ensure that it can operate without you at the helm. While it may be a 'lifestyle' business in many respects, you should nevertheless have a management team in place who know exactly what to do in your absence. Only then can you sell it to an investor without forcing them to become heavily engaged on a daily basis.

Balancing the Books

You'll also need to ensure that your books are in order and that you can provide clear and consistent accounts for the last 3 to 5 years. You need to keep up to date with your management accounts as well. An investor will want to see all of this information and may have a number of questions related, so you should have all the answers readily to hand as well.

Accountant Is Key

Of course, you will need to work very closely with an accountant and should be prepared to lean on them for advice as the process continues to unfold. If the investor has questions that you cannot answer yourself, you should be able to turn to this accountant to fill in any of the blanks.

Plan of Action

Remember, preparation is critical, and if you do intend to sell your business you should take some time to make sure that it is fully marketable. Contact a company that offers accounting services to learn more.