There are a few steps you can and should take to help you gather data to make the right decisions about the future of your business.
It’s the holiday season, and the time of year when business owners start to think about the following year, and in the case of the end of this year, perhaps even the next decade.
Perhaps it is time to consider selling your business in California and moving on, or focus on growing your business before you sell. Whatever your motivation, this time of year is an ideal opportunity to conduct a business checkup and assess your performance.
The Essentials of a Business Checkup
When we talk about a business checkup, what do we mean? To understand the health of your business, you need to know what revenue is coming in, where it’s coming from, where you are spending it, whether your business is growing or shrinking, and whether you are making a decent profit.
The other part of the checkup is the health of your industry. What does the future look like for what you do? Is the market growing or shrinking? What kind of competition do you face? These factors all contribute to the potential of your business to continue generating revenue.
That means you will be looking at projections, at least for the next year or even beyond. To do that, you need to take a close look at your business right now.
Evaluate Your Equipment
This is an essential step for several reasons. First, if you plan to sell your business shortly, you will need to decide whether to replace or sell your equipment. For example, the state of California has new regulations that require all commercial vehicles to have engines that are 2010 or newer to improve emission standards and reduce pollution.
That means if you are a landscaper and your fleet of trucks is aging, you may need to consider replacing them, regardless of your future business plans. If you plan to sell your business soon, you can sell it without the trucks you own, but you’ll receive a significantly lower price if the new owner must provide their fleet.
If you don’t feel comfortable assessing the value of your equipment on your own, consider hiring a professional for a valuation. You may be surprised by what you already have.
Evaluate your Technology
Nearly every industry is being disrupted by the addition of new technology and big data. Where do you stand in this new environment? Are you gathering data about your customers, clients, and even your competition? Are your computer systems and POS systems up to date? What about the office equipment and computers in your office?
The truth is, companies that are growing in today’s market are embracing technology, which is what customers and clients are looking for and even expect. It is also what a potential buyer for your business will be looking for. If you are behind the times, you may get less money for your business than you anticipated.
Value Your Real Estate
Do you own real estate as a part of your business? Then you should know what it is worth both as a part of your business and if sold separately. What if you held on to that property and leased it back to the new owner of your business once it sells? How would that affect your income and your taxes?
Even if you lease, real estate is essential. Have you reviewed your lease in detail? Would the terms you have pass on to a new owner, or would they need to negotiate your lease? Many experts recommend negotiating your lease before you begin the process of selling your business, as this is often the reason a deal will fail.
Location is always key to your business success. Check to ensure yours is secure, regardless of who owns your business in the new year.
Perform or Get a Business Valuation
Ultimately, the key to a business checkup is to have a general understanding of your businessis value. Many businesses perform or have a business valuation done annually, as it helps them track growth year over year and often identifies areas where improvements can be made.
This is also the first step in selling your business. Many business owners are unaware of their business’s actual value, and even more often, they lack an exit strategy altogether. Having one is essential not only when thinking about selling your business but in case of emergency or even a disaster like illness, disability, or even in the case of the business owner’s death.
At Rogerson Business Services, we offer a free program called Seven Steps to Valuing Your Business, which includes valuable tools to help you assess your current situation. If you are seeking a more professional valuation or require one to facilitate financing options, such as an SBA loan, please get in touch with us here. We offer professional business valuations on several levels, completed by a Certified Business Broker.
You must know the health of your business going into the new year and the next decade. How well you are doing now and how well you are likely to do going forward will determine the value of your business and what you can ask for it when it is time to sell. It can also help you determine if you should sell now or later. The data a business valuation will provide enables you to make a more informed decision.
Ready to sell your business in California, or just have questions about the market and what to expect? Need a professional business valuation by a Certified Business Broker? Contact us here at Rogerson Business Services today. We’d be happy to discuss your next steps with you.