Turn your business into a sand-kicking powerhouse with a simple but effective plan
Picture, if you will, that your business is your body. As you know, getting the most from your body requires regular upkeep and good habits. It means eating right, exercising regularly, and avoiding health-threatening activities like guzzling alcohol by the quart or tiding public transportation in Los Angeles.
Now, suppose that you were headed for an endless summer of beach volleyball and pool parties. All that health maintenance and sensible living would undoubtedly serve you well, but there comes a time in the life of every business when you want not just a good-looking organism but one that will sell for the highest price.
To return to our fitness metaphor, that is the time when you must do some extra training and muscle flexing. There's a simple, effective workout regime that you can begin now. "There is value hidden inside any enterprise," says Richard P. Shanley, a partner at Richard A. Eisner & Co., an accounting and consulting firm in New York. The tough part comes in bringing it out.
IN CASE SOMEONE WHO'S dying to buy a business like yours should suddenly appear out of the blue, make sure you're prepared. Think of it as staying limber.
GET (AND STAY) ORGANIZED. Be certain your business plan and financial statements are up-to-date. The implied message is that it will be a cinch for a buyer to assume the reins, says Colin Gabriel, a mergers-and-acquisitions specialist in Westport, Conn., and author of How to Sell Your Business -- and Get What You Want! (Gwent Press Inc., 1998).
KEEP TRACK. Another way to demonstrate your company's saleworthiness is to have your book audited regularly by a professional accounting firm. Doing this not only proves that your business is as profitable as you claim; it's also evidence that you're on top of things, says Hank James, president of Walnut Creek, Calif.-based Corporate finance Associates of Northern California Inc., a network of mergers-and-acquisitions consultants: "One experienced buying group told me they'd pay 5 percent more for businesses with audited financials."
Beyond a simple audit, have your business assessed annually, says Robert Bergeth, an investment-banking consultant and the president of International Mergers & Acquisitions in Minneapolis: "You want to be able to show at least three years of stable earnings and revenue."
REACH FOR SECONDS. Bankers and buyers want to know that your...