The only certainty in business, as we head into every new year, is the uncertainty of selling a business.
The Definition: Uncertainty of Selling a Business
Owning and operating a business in California comes with its share of uncertainty. If there were no uncertainty, everyone would do it. If there were no uncertainty, there would be no need for a place called the Stock Exchange. It is where we buy and sell the shares we own in a public corporation. These shares can change value in milliseconds.
The reason for highlighting all this uncertainty is that if you own and operate a business and want to sell or exit on your own terms, the process comes with considerable uncertainty. However, the time may now be correct.
If the thought is on your mind to sell your business as you go to work each day, the time may be right to put a plan together and see if the market will bring you a buyer for your business.
Accurate financial statement – the silent deal killer
As I navigate the many variables of selling a business in California, a recurring theme emerges too often. Although not frequently, the quality of the set of financial statements presented by the business owner is crucial. These are shown to business buyers.
Probably the most essential item in any transaction to sell or buy a business is the quality of the financial statements.
It’s understood that sellers wish to minimize the amount of tax they have to pay. It’s also understood that there are many legal ways to reduce, delay, or minimize taxes.
It goes without saying that it won’t be possible to sell a business if the financial statements are not accurate. The accuracy must be reflected in all the supporting documents that are part of the financial statements. This includes journals.
And ledgers that record sales to software such as QuickBooks or Sage, payroll, inventory counts, credit card statements, bank statements, profit and Loss Statements, and ultimately, the annual Tax Return.
The good news is that when you start the process to sell your business, you get to make that decision. Once you make that decision, there are many other decisions to be made. They affect more than the seller. Decisions impact the buyer, the lender, and individuals involved in the process. This includes a third-party loan provider. They also impact a landlord if the business leases space to operate. Furthermore, they affect employees, customers, suppliers, and more.
If you are thinking of selling your business and want an overview, click this link to see the Many Steps to Sell A Business.
Don’t tell your employees the business is for sale
If you want to remove another factor of uncertainty when selling your business, then please don’t tell your employees.
By definition, employees work in the business as it provides them with a job. If they know or find out that the business is for sale and the job may be eliminated, they will naturally seek another job. They want the security of employment and a steady paycheck.
Recently, a business owner thought he was doing the right thing by telling his employee that the business was for sale. Two weeks later, the employee had a new job. Three weeks after that, the buyer withdrew his offer to purchase the business. This happened because the buyer wanted the employee to continue.
If you have questions about selling your business and you’d like to get an answer, you are welcome to contact Andrew Rogerson or call me Toll-Free (844) 414-9700 or email me at support@rogersonbusinessservices.com.