(612) 206-3701 info@lucerelegal.com

Selling Your Business at a Maximum Profit

Lucere Legal helps business owners sell their company for maximum profit

Managing the financials of a small business can be a challenge–particularly when the time comes to sell your business. The net worth of the average small business owner is typically tied up in his or her business. More than just the furniture and inventory, more abstract concepts like customer loyalty or the familiarity of your particular brand may be of immense value.

Even if you plan to keep your business, well, yours for decades to come, there are steps you should take now to ensure that you reap monetary reward for all that effort you put in along the way. This is true, too, even if your prospective buyers are your business partners, or if you expect to hand things over to members of your family.

Think Beyond Your Product or Service

As I mentioned, your business has enormous potential for added value that goes well beyond the revenue-generating product or service. If your buyer is serious, they will pay just as much attention to the team you have assembled and your customer relations. A solid foundation of experienced employees is vital for any transitional period, empowering the new owners to hit the ground running without need to spend weeks with hiring and training. An ongoing business relationship with a customer does the same, ensuring that revenue is coming in even after you are long gone.

Establish the Real Value of Your Business

You want to maximize what your get out of selling your business, so a professional appraiser is a must. There are many, many ways to value a business; each industry has its standards and you should not be trying to do this yourself. Not only will a professional price out aspects you may have missed, but they may even be able to provide you with simple things you can do to shore up your position. For this reason, plan to bring them in at least a year ahead of the prospective sale.

Document your business plans and processes.

You have built your business and know every aspect of its operations, but what may seem obvious to your experienced eyes may not be to your buyer. Being able to leave them with clear documentation of how your business functions and what existing business relationships are in place is not only useful for them moving forward, it is a testament to your good management practices that will edge the value of your business upwards.

Some business buyers won’t even consider buying a business that isn’t turn-key – meaning that the business processes are established and well documented, so they can step in with minimal hassle.

Take note that documentation is also a firm shield against any litigation that may be levied against you, both before and after the sale. Make certain that you have the following:

  • Employment policies in an employee handbook.
  • Written contracts with all employees, customers, vendors, or whomever else your business has a relationship with.
  • Complete financial records
  • Up-to-date corporate records
  • Have the Right Structure in Place
  • Fully-maximized tax benefits and well-protected assets are another important value-add. If you haven’t already, make sure that your business structure is the right one for you and your business. An LLC or corporation is a must if the greater part of your net worth resides inside the company, not to mention that savvy business buyers generally don’t like to buy sole proprietorships or general partnerships.

To learn more about this, see our Sell A Business page, and be sure to watch the video we posted there on preparing your business for a sale.

We can help you protect and grow your company through effective risk management. Call our office today at 612-206-3701 or via our online contact form to schedule a business consultation session.

Image Courtesy of Flare | FreeDigitalPhotos.net

Contact us to see how we can help you with Selling Your Business

You may also like . . .

3 Steps to Maximize Your Profit When You Sell Your Business

If you are planning to ever sell your business, now or in the future, there are 3 strategies you should use to get as much return as possible on your hard work in building your business: Pre-sale planning.  There are plenty of opportunities to increase the sale...

How To Prepare Your Small Business For A Profitable Sale

When you started your own business, you probably didn't give much consideration to selling it. However, with statistics showing that 80% of a small business owner’s net worth is tied up in their company, preparing your business for a profitable sale should be on your...

The plain-English guide for Minnesota small business owners

When it comes to business, ignorance isn't bliss; ignorance is risk.

There's a handful of legal topics that business owners should be familiar with, at least on a rudimentary level, to reduce the risk of having something horrible come out of left field.

This book is a legal guide to help you put the most common business legal issues on your radar, with enough information for you to be on the alert for when you may need to get some professional advice.

The intention in arming you with this information is so that you can proceed in business confidently and with fewer legal quagmires.

Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

Make An Appointment>

Join Our Mailing List

Subscribe to our newsletter list to get information and resources helpful to running your business and planning and managing your personal financial affairs delivered right to your inbox.

We don’t spam and won’t share your information with anyone, at anytime, ever.

Check out our podcast

The Small Business Buzz Podcast