You’ve started a business and run it successfully. But what will happen when you find yourself ready to move on? Whether you’ve been in business for one year or 20 years, entrepreneurs need to think about their end goal plan – do you eventually want to take on a partner, do you want to sell your business?
We’ve talked about the ways that small businesses can grow by outsourcing their bookkeeping and now we want to share information about how outsourcing your bookkeeping can also help you sell your business. Accounting firms or bookkeepers are equipped to discuss exit strategy options with business owners since they have keen insight into the financial health and stability of the business. So, how does that insight translate into an opportunity to find a buyer for your business? Let’s take a look.
Business Valuation: While you can’t take into account the blood, sweat and tears that went into your business, you need to find a way to figure out what the market value of your business is. An accounting firm or a bookkeeping service can determine your business's market position, the financial situation, and any strengths or weaknesses that could have an impact on the valuation.
Having Your Books Ready to Show: Prospective buyers who are interested in your business will require at least three years of financial information. Do you have that information ready to go or could you use the help of a financial statement expert? If your statements have been prepared by an outsourced third party like a bookkeeper or an accounting firm, they will be taken as being more formal and reliable. This not only makes a better impression to potential buyers, but also makes their job of due diligence much easier.
True Profit: When sharing the details of your profits with potential buyers, would you know what expenses to exclude to arrive at your true profit number? Most private businesses will have a variety of non-operational expenses, like a car lease. There may also be infrequent expenses incurred during the past several years that should be excluded in a buyer's analysis - moving expenses, unusual legal expenses, etc.
The easier you make the buying process for those interested in your business, the faster you will likely have a sale and a sale price that you are happy with. And don’t forget about you! Selling your business, for whatever reason, will likely be a stressful time. Having the support of a financial team will make the transition easier for you too.
When small businesses decide to outsource their books to an accounting firm or a bookkeeping service, there are so many ways that those third party experts can add value to your business. If you are just starting out and could use some help getting your financial processes in order or whether you are at the stage when you are preparing to sell your business, contact Simply Bookkeeping to find out how we can help.