Hiring a distribution business broker is a very important thing to do when getting ready to sell a distribution business. This is for the simple fact that the broker has more experience selling businesses that are similar to yours and he has a great network that he can use to help you find the right buyer fast. At So-Cal Business Brokers we have been in the business of selling distribution businesses for more than 20 years now. We know what needs to be done to find the right buyer and sell fast. One thing we recommend our clients to do is to increase the overall value of their business before listing. Here are our top recommendations.
Increase cash flow
The number one factor that a potential buyer looks at to determine the value of a business is cash flow. Buyers normally calculate the value of a business by estimating its future cash flow and assessing the risks associated with generating the cash flow. Buyers pay more for businesses that have a higher likelihood of future growth. When you bring in our distribution business brokers one of the things we will help you do is prepare future cash flow projections for the business. Our detailed business valuation report will further give your insight into your business. The insight will help explore new lucrative opportunities and help you increase your cash flow.
Your distribution business may have a good cash flow but how good is its management? Having a well-trained and widely knowledgeable management team is very desirable for any business. A strong business management will have several key players that have job-specific experience. The first thing we will do is determine if the business can run profitably in your absence. If the answer is no we will help train or hire a management team to take over your responsibilities. This has to be done before listing the business. Buyers are interested in buying a distribution business that can thrive in the absence of the owner.
Diversified and recurring revenue
In our experience selling businesses, the most valuable and easy to sell business is one that has diversified and recurring revenue base. Having a single customer making up 30% of your business’ revenue is quite risky. Potential buyers will tend to avoid such a business. This is because if the major client leaves then the business will fail. Our distribution business broker will help review your sales per customer to ensure it is not concentrated among a handful of customers. We can also help you get more revenue from others. Establishing recurring revenue service to build up your value is the best way of making your business more valuable.
There is a lot more you can do to increase the value of your business. What you ought to do depends on the nature of your business. Contact us today and let us discuss the things you can do to increase the overall value of your distribution business before selling.