What Makes Your Business Valuable to a Buyer? Canada 150 Recommendation #76

Wednesday’s= Succession

Succession cannot take place unless you find someone to buy your business. If there is no buyer then you can either continue to run the business or close it down without compensation. Neither of these options are as attractive as selling the business at a profit.

As most people are hoping to sell their business to help fund their retirement, it is good idea to figure out what would make your business valuable to a buyer.

A buyer is looking for a business that is profitable and has equity. Equity is generally defined as having more assets than liabilities. Business owners are also interested in profits and equity. If you are running your business in a way that makes money and you are accumulating more assets than liabilities, you are making your business more attractive to buyers.

A buyer will be interested in you showing them how the business would continue to be profitable after they buy it. Business owners need to consider this — how much of the business is dependent on the owner and how can you change that? The usual fix is growth. The more employees there are — the less likely the owner is the only reason customers buy from the business.

Think about your business from the point of view of a buyer and make the changes needed to make the business attractive to a buyer.

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