What are the top 5 ways to sell your business in Austin TX in the next 3 or 4 years?  How should you prepare?  What are the best ways to extract the most value for your business sale?

Many sellers are under the impression that selling a business is easy.  They have often been approached by interested buyers over the years.  What if I told you that only 20% of privately-held businesses actually sell?  Would that change your opinion?  Surely, though, they think, my business is different.  After all, you’ve been approached by many different buyers over the years.  Understandably, you think your business is special.  It IS.  After all, it takes an enormous amount of work to grow a business.  Most fail.  You HAVE created something special.  But, suppose I told you that almost EVERY business I speak with has an interested buyer before they come speak with me?  How is it possible then that almost 80% of businesses never sell?  The answer is easy- There is a big difference between a SERIOUS buyer and those that are merely kicking the tires.  There is also a BIG difference in businesses that are prepared for sale and those that are not.  Almost every business I represent has at least 100 buyers interested in it before we find that RIGHT buyer.  Most importantly, there are times when there ARE numerous and very serious buyers, but the business is ill-prepared to be sold.  How can you avoid that situation?  If you’ve thought to yourself, “Hmmm…How to sell my business in Austin TX in 3 or 4 years“, please keep reading.

1. Keep good books and records
   Have an outside CPA do your taxes.  Hire that same CPA or a reputable bookkeeper to do your books on at least a quarterly basis for three or four years.  It looks much better to an outside buyer than keeping your books yourself.  It is also much better than trying to prove that you make what you make with a box of old receipts.  The buyer will trust outside, professional help much more than you.
2. Limit Your Capital Expenditures To What Is Necessary
   Are you about to spend an inordinate amount to upgrade your website or POS system?  You may want to rethink that.  You only get credit for pre-tax, pre-financing profits that show up on your P&L.  If you spend a bundle on an item and depreciate the item over time, you will not realize the full investment of that item if you sell your business in the midst of that time period.  Of course, if you definitely need to upgrade a vehicle or other item, go ahead and do so.  A buyer will hold it against you if they buy a vehicle from you with 200,000 miles and clearly needs to be upgraded.
3.  Keep the proper amount of working capital on hand.  No more, no less…
   Most buyers do not know any better.  Meaning, most buyers are going to assume that the amount of working capital on the books is what is needed to run the business.  If you are in the habit of buying more inventory than what is needed when it is “on sale”, beware.  A buyer will believe the amount on your books is the right amount necessary to properly run the business.  If you haphazardly collect accounts receivable from your customers, a buyer will assume they need that amount of A/R in order not to put in any more capital beyond the purchase price.  Remember, you have perfect information about your business, the buyer does not.  They are at much more risk than you are.  Keep the right amount of working capital on hand.
4. Limit the personal expenses in your business
   This is easy.  While everyone is trying to limit the amount they pay on their income taxes, it is difficult for a buyer to separate what is truly needed for the business versus and “personal” items that are expensed through the business.  These include travel, entertainment, and even your compensation amount.  Buyers are likely to see everything at face value.  The 33% you save on your taxes is minuscule compared to the multiple of earnings you get for every dollar of seller’s discretionary earnings.  If you are determined to save money on taxes, just don’t expect to add-back those amounts when it comes time to sell.  Most business brokers do sellers a disservice by adding back personal expenses.  The bank usually won’t loan money for this and buyers simply don’t accept it.  Don’t do it…
5. Put Contracts in Place
   Remember, you need to put yourself in the buyer’s shoes.  They will be nervous that they will give you a lot of money at close and then the business collapses.  This is how they think.  Trust me.  To mitigate this risk, see if you can lock up some of your customers with a contract.  Buyers love contracts.  Buyers also get nervous that all the employees are going to quit, especially key employees.  Can you lock them up for numerous years?  Are there ways to offer your employees incentives to stay on after the transition?  This does not have to be just by paying them more money or in bonuses.  Studies show that more responsibility, titles, and autonomy can be very effective ways to keep employees satisfied and engaged, rather than simply throwing more money at them.As you contemplate, “How To Sell My Business In Austin TX In 3 or 4 Years“, keep these procedures in mind.  It will make your business more attractive to more buyers and result in a higher sales price.