Keys to Maximizing the Value of Your Business before Selling It

Hiring an experienced business broker Orange County is the first step to selling a business for maximum profit. However, it is good to note that the broker will not do everything for you. You, the business owner, have a part to play in order to command the highest possible price for your company. In this post we will be looking at the three things you need to do to increase the overall value of your business.

Focus on increasing the cash flow

Something that almost all experienced business brokers Orange County know is that potential buyers always focus on the cash flow when determining the value of a business. Buyers calculate the value of the business by estimating the future cash flow and assessing the associated risk that comes with generating that cash flow. Business with a track record of growing or sustainable cash validate their products/services are great and also demonstrate that the management team is able to drive growth. As a result such a business will be more attractive to potential buyers.

Put yourself in the shoes of buyers

The best way to evaluate the suitability of your business for sale is to put yourself in a buyer’s shoes. There are five areas buyers scrutinize the most when buying a business:

  • Strategic planning. A well written plan gives a buyer the confidence that a business owner knows where the business is going and how to get there.
  • Strong management. Widely knowledgeable and properly trained management team makes a business more desirable.
  • Diversified and recurring revenue base. Your business should not generate more than 30% of its revenue from a single client. Buyers are interested in businesses that have multiple clients.
  • High barriers to entry. Buyers want to purchase businesses that are unique. You can create barriers to entry through having intellectual property like trademarks, patents, economies of scale, customer loyalty, distribution or supplier agreements and significant capital investment.
  • Scalability. Scalable, measurable and repeatable processes make a business more attractive to buyers.

Pick the best exit strategy

Another thing you need to do to make your business more valuable is to pick the right exit strategy. When and how you sell will determine how much you end up making at the end of the day. An experienced business broker Orange County can help plan your exit and help with execution. He will also help you time the sale perfectly.

While the role of business brokers Orange County is to help you close fast and sell for maximum profit, it is your job to get your business sufficiently ready. Liaising with a broker when getting ready to sell will increase your chances of success.

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