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Secret to Selling your Business: Financial Housekeeping

Secret to Selling your Business: Financial Housekeeping

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  sell your business

Improve your chances of selling your business for maximum profit by presenting buyers with accurate and complete financial statements. Even if you have an upscale office, first-class employees and great branding, buyers will balk if they don’t see impressive and verifiable numbers on your financial documents.

If you don’t have a CPA working for you, hire one to assemble and double-check your finances. Selling a business creates complicated tax issues, and an accountant knows how to lower taxes, which means you’ll keep more of your post-sale money.

An accountant, along with a business broker, will help you fine-tune your company’s financials. Prospective buyers will have their own accountants looking over your financial documents. If you prepare financials without professional help, you run the risk of losing or delaying a sale.

At the first meeting, you may want to discuss basic financial information and let the potential buyer observe how your business operates. Let them come to their own conclusion about the company’s financial health. If you have a cash business, like a deli, you can also write a pro-forma estimate for a potential buyer. It should be clearly marked as a “projected” total to protect your interests. This is a temporary solution –  you’ll still need to get your books in order for future negotiations and due diligence.

Your accountant should prepare at least two to three years worth of financial statements. For extra leverage with prospects, gather financial statements from the last five years. You can show buyers compiled, reviewed or audited statements.

  • Compiled statements aren’t checked for accuracy. You simply hand the accountant your income statement, balance sheet and other financial records and he or she organizes them.
  • Reviewed statements are compared to the average profits and performances for businesses in your industry.
  • Audited statements are checked for accuracy by your CPA, who may go over accounts receivable records and inventory to ensure there are no mistakes in the original numbers.  

Be honest. Buyers can see through incomplete or exaggerated information, so admit mistakes and tidy up your business financials   

 

What is Financial Recasting?

Your business broker may recommend financial recasting of your accounting statements. This process improves transparency, Compiling financials is fine as a first step, but when it becomes apparent a buyer is interested, there’s no room for error on your financial statements.

Financial recasting is a fancy way of adjusting your income statements to tell potential buyers what they want to know about your company. Here are a few changes your accountant might make when recasting a financial statement:

  • Take out interest payments made on business loans
  • Write off uncollectible accounts receivable
  • Adjust rent and owner’s salary to market rate
  • Strike debt that won’t be assumed by the new owner
  • Remove income and expenses that will cease after the sale

Indicate changes made to your original documents. This will increase the buyer’s faith in you and expedite the due diligence process. Your accountant may make changes to your income statement and balance sheet when recasting. Changes to the balance sheet indicate cash you’ll keep for yourself after the sale.

 

Ratios

Buyers want to know how a business compares to other businesses in the same industry. Return on assets and return on equity are common ratios used in most businesses; check with your industry’s trade association to find out what ratios should be used for your business.

 

What Do Buyers Look For in Financials?

Buyers are more likely to make an offer to businesses that pay their accounts receivables within 30 days and have an increase in net worth for the last few years. They’ll also check the gross margins for your products to see if margins are increasing or declining.

Most small businesses prefer to use compiled statements during the sales process. This won’t harm negotiations with the buyer if you’re sure the initial figures are correct. If not, audited statements may prevent objections during due diligence.

Get expert advice on improving your business and financials for a fast sale by hiring a business broker. http://sellyourbusinessfast.info/  Call 1-800-BIZ-BROKER or visit us online at www.1800bizbroker.com. We’ve created a searchable database of business brokers and merger and acquisition specialists who want to work with you to sell your company for the best price possible. Contact us today for more information.

Helicopter Business For Sale

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  business for sale

Price: $4.9M

Income: $2.2M

Assets: $2.6M

Very Profitable Aerial Crane & Firefighting Helicopter Operation

39 Year old business that offers precision external load operations, fire fighting, aerial construction and heavy lift projects, power pole and utility lines including communications survey and repair, law enforcement, frost control, seismic work, charter, motion picture support, including aerial cinematography and video production.

They have ongoing contracts with the CA Department of Forestry (firefighting) and DOJ (law enforcement).

This operation is also an FAA Certified Repair Center for both fixed wing and rotary aircraft since 2010.

This business is one of the largest Sikorsky parts distributors in the country.

Operations are based in both Northern and Southern CA.

Includes FAA Parts 133, 135, and 137 licenses; 3 helicopters and several vehicles, trailers, and fuel trucks.

GROW the business: Majority of income comes from fire fighting and aerial crane services. Expand repair center and part business. Also opportunity to increase charter business.

To get more information please contact us and complete a nondisclosure agreement.

Business Sold! Manufacturer of Motorcycle Frames

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  business sold

It is our pleasure to announce the sale of a Motorcycle Frame and Parts Manufacture in Riverside.   Chassis Design Company has been in business for over ten years, and I am sure the new owners will carry on and grow the business well into the future.

Chassis Design manufactures motorcycle frames, oil and gas tanks, and handlebars.

Are you thinking about selling a business?  You should contact us, we are Business Brokers.  We specialize in the Confidential Sales of Businesses.

Call 1-800-Biz-Broker or complete the form below.

New Business for Sale: Tire and Auto Repair with Real Estate

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  business for sale

Family Run, established for Four Decades!  Tire and Auto Service Center with Real Estate!!

 

Asking Price:$899,996

Cash Flow:$199,886

Gross Revenue:$1,022,269

Inventory:$6,000*

Real Estate:$500,000

Established:1972

*not included in asking price.

Business Description

SBA Qualified!

A family owned and operated service center specializing in tire, wheels, and brakes. However, they also offer full auto repair and diagnostics. Opened for business in 1972 they have been providing the Inland Empire and surrounding communities with the best in automotive repair and maintenance.

Other information:

REAL ESTATE INCLUDED.
Approved for SBA financing with 20% down
Excellent book & records
Owner is retiring
6 Lifts / Bays
Business is thriving from its stellar reputation: Google 4.5 Stars with 34 Reviews & Yelp 4.5 Stars with 31 Reviews


Detailed Information

Inventory:
Not included in asking price
Real Estate:
Owned
Included in asking price
Building SF:
N/A
Employees:
4 FT
Facilities:
6 Lifts / Bays On Major Street
Competition:
Yes, however, this business has been established over 40 Years! Excellent reviews on Yelp and Google.
Growth & Expansion:
Currently closed Sun and Mon
Financing:
SBA Qualified!
Support & Training:
Yes. Owner will help with training and transition
Reason for Selling:
Retiring

Thinking about buying or Selling a Business?  You need a Business Broker!  Contact us today.

5 Accounting Tips to Increase the Value of your Business

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  sell your business seller’s discretionary earnings

 

 

1.  Stop minimizing taxes; instead maximize reported profitability

Many small businesses utilize the cash-basis of accounting rather than the accrual basis.  Doing so enables businesses to accelerate expenses into the current tax year and defer revenues to the following tax year.  This is a very aggressive method of minimizing taxes, and it follows that this method minimizes earnings and unfortunately minimizes business valuations.

2.  Eliminate excessive personal expenses and skimming cash

Similarly, if you run personal expenses through your business to minimize taxes, that practice is counterproductive to the value of your business.  Although some of those expenses might be able to be “sold” as add-backs to arrive at seller’s discretionary earnings (SDE), buyers often fight those adjustments and lenders will not consider them at all in determining the value of the business

3.   Stop expensing capital expenditures

Another tax minimization strategy used by some businesses is to record capital assets they acquire into expense accounts rather than into asset accounts.  By doing so, they expense 100% of the cash outlay in the year the asset is acquired versus having to depreciate the asset over several years

4.  Improve your inventory accounting system

Yet another area of tax minimization is the handling of inventory.  When the value of inventory is understated, the cost of goods sold is overstated and earnings are thus understated, which negatively affects the business valuation.  Inventory accounting in small businesses is notoriously poor, which represents a significant risk for buyers.  By making improvements in your inventory accounting, you can minimize buyers’ risks while also improving the quality of information which you can use to further improve your business operations.

5.   Track key business metrics

Tracking key business metrics on monthly comparative reports can help spot negative and positive trends and identify opportunities for improvement.  The nature of key business metrics will vary from company to company.  Some common metrics are: leads to close percentages, gross margin percentage, payroll percentage, overhead percentage, average sale, sales by product line, average monthly sales, seasonality percentages, average accounts receivable collection period, average inventory levels and turnover rates, working capital levels, salesperson percentages, bad debt ratio, customer percentages, etc.  To improve your business value, tracking metrics is insufficient by itself.  You must take action to make improvements and then monitor your progress using the metrics.

Prior to selling your business, there is considerable opportunity to increase its value by reviewing and improving your accounting systems and procedures.  In most instances, the further in advance you begin to address these issues, the greater the value improvement opportunity.

Call a business broker for a free consultation. We offer no-charge, no-obligation evaluations of small businesses. We can provide a broker opinion of value and help you identify obstacles to a successful sale as well as opportunities for improvement to increase the value of your business. That is a great way to start planning for a successful and profitable exit from your business.

Business For Sale: Muffler Repair Shop

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  business for sale

New Business For Sale!

Specialty Auto Repair… Performance Muffler Shop

Asking Price:$149,996

Cash Flow:N/A

Gross Revenue:$161,342

Established:1981

Print Share

Business Description

Profitable and 5-Star Yelp Reputation. 35+ Years in business

Mechanics: are you looking for a shop to get your business started? This Muffler Shop has been established for over 35 years!
Excellent 5 star reviews on Yelp and other review sites.
Independently owned and operated, seller has operated this shop solo since 2010…zero employees!
Has established corporate accounts.
Picks and chooses his work.
Although a one person operation, this is an excellent opportunity for a mechanic looking for his first shop. Easy to grow, add employees, open weekends, advertise….

Please complete an NDA for more information. Offered by Spectrum Business Advisors, Business Brokers.  Call 1-800-Biz-Broker.


Detailed Information

Real Estate:
Leased
Building SF:
2,800
Lease Expiration:
8/31/2019
Employees:
Zero
Facilities:
Fully functioning & equipped muffler shop. 3 Lifts Lots of parking
Competition:
Established over 35 years! Current owner for 22+ years!
Growth & Expansion:
Open on weekends. Add employees, seller limits business.
Financing:
Yes! TBD
Support & Training:
Yes!
Reason for Selling:
Retirement

New Listing: Dog Grooming Business for Sale

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  business for sale

Dog Grooming + Self Service Dog Wash

 Yucaipa, CA (San Bernardino County)

Asking Price:$110,000

Cash Flow:$56,936

Gross Revenue:$327,276

EBITDA:N/A

FF&E:$30,000

Inventory:$5,000*

Lease Rate/Sq. Ft.:N/A

Established:2010

*not included in asking price.

Business Description

Dog Lovers Dream Business! Established 2010

Ready for an owner/operator! Perfect for a dog groomer… Business has been serving their market for over 7 years. Amenities such as grooming, bathing, self-service bathing, and dog-spa treatments are available.

4 dedicated Groomers on Staff.

Over 3000 satisfied customers in the business database!

While current owner loves animals, she is not a groomer…. great opportunity for a groomer!


Detailed Information

Inventory:
Not included in asking price
Real Estate:
Leased
Building SF:
N/A
Lease Expiration:
N/A
Employees:
9
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
Self standing building on major road. Fully functioning Dog Grooming facility. 5 Groomers stations, with room to grow. Bathing area with self-service dog washing available. Small retail area.
Competition:
Yes. However this business is well established (7 years). xcellent reviews and web presence. Over 3000 customers on database
Growth & Expansion:
Space available to add groomers. Market to database. Social media ads.
Financing:
TBD
Support & Training:
Yes. 2-3 weeks as needed/negotiated. Owner is not a groomer, but has built a great business in the community with excellent online reviews.
Reason for Selling:
Other interests

 

Thinking about buying or selling your business?  We are Business Broker.  Contact us today!

Dog Daycare and Boarding Business for Sale

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  business for sale

Asking Price:$50,000

Cash Flow:$4,560

Gross Revenue:$170,448

Business Description

Dog Lovers Dream! This business offers Doggie Day Care & Boarding in a CAGE FREE environment. Established in 2014, this business is established but not operated by the owner, so it is not profitable. However, if you add-back the Manager’s $525 weekly salary there was a small earnings of $4560. This business really needs an owner operator to turn things around. However, that tipping point of profitability is within sight!

Benefit of Buying this Pet Business VS. Starting your own:
Great reputation is established (check out social media/Yelp)
Established website & SEO. Ranks on the first page of Google for “Dog Boarding <<City>> ”
Over 800 customers in the database- Great base to market to
Everything is already set-up and running!
All the build-out is done
Cheaper than building new & starting with Zero sales, Zero reputation, & Zero customer database.


Detailed Information

Real Estate:
Leased
Building SF:
6,480
Lease Expiration:
N/A
Employees:
4
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
Large 6480 sq/ft warehouse. Open space dog day care & boarding. Add groomin for incremental income.
Competition:
Competitive market, however if you want to be in this industry, buying this business will give you a huge head start.
Growth & Expansion:
Add Grooming & Retail…plenty of space. Needs an owner operator
Financing:
TBD
Support & Training:
2-4 weeks
Reason for Selling:
Owner lives on the East Coast

Contact us for more information.  We are Business Brokers.  We help entrepreneurs sell their businesses.

Business for Sale Transactions up 29%

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  business for sale

The current climate to sell your business is red hot!

BizBuySell.com, a major “business for sale” website– recorded 2,368 business sales in the first quarter of 2017….an increase of over 29% from the first quarter of 2016. That is an amazing and record setting statistic! The increase is sales is due in part to closing transactions around the New Year, a healthy economy, and continued access to financing.

Have you been thinking about selling your business? Now may be the perfect time to engage a business broker and see what your business is worth. Call a business professional today at 1-800-Biz-Broker. We specialized in the confidential sale of businesses. No long term commitments, just results.

Call 1-800-Biz-Broker or complete the form below.

Residential Cleaning Business for Sale (Riverside County)

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  business for sale

Just Listed for Sale!

Established Residential Cleaning Service (Non-franchise)

 

Business Description

Established in 2006

Price: $224,999     (plus cleaning supplies of about $2,000)

2016 Sales: $337,258

2016 Earnings: $128,530

 

Very Established Residential Cleaning Service!   Residential cleaning is a $10 BILLION Industry and expected to grow by 16% by 2018.

If you are looking for:

  • a simple yet strong business model offering a great ROI
  • primarily Monday-Friday work schedule
  • recurring cash revenue base

 

This business currently serves over 240 clients monthly and has hundreds more in its database.   There are 9 employees that handle the work… owners do not clean homes!  Managed by a husband & wife team out of an office in Riverside County.  Can be relocated or even managed from your home.

Monthly Income & Residential Clients are 100% verifiable

Sale includes 3 vans, cleaning equipment, and supplies … this is a turnkey business.

You will be trained by the sellers.

This business is represented by Spectrum Business Advisors.   Thinking about buying or selling your business?  You need to contact a Business Broker.  Please contact us at 1-800-Biz-Broker for more information.

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