Maximize the Value of Your Business By Being Prepared to Sell      

There is a difference between being "Ready to Sell" and being "Prepared to Sell" a business. Often when we meet a business owner for the first time, he and/or she says they are ready to sell. After a few key questions, however, we find that the owner is not properly prepared to sell their company. When it comes to the sale of your business, readiness is an emotional state of mind. "I'm ready to let go" or "I'm tired and ready to move on" are some of the refrains from business owners who've decided they are ready to sell their company and retire like so many of their friends have done.

Being truly prepared, however, is an elevated state of readiness achieved by careful planning, consultation with key advisors (attorney, accountant, financial planner, insurance advisor, banker and business broker) and the creation of a road map on how to achieve your plans for life after sale of the business.  Moreover, the difference between being ready to sell and being prepared to sell can be readily apparent to prospective buyers. An experienced business broker can be your team leader to guide you through the planning process.

One of the most important areas of consideration in the process of reaching a state of true preparedness is examining the key attributes that contribute to value in your business. These Value Drivers are the evidence buyers are looking for, and which must exist in order for you to obtain a premium price for your business. Without these, your company may appear ordinary, average and lacking a compelling reason for someone to pay top dollar for your company. Some key value drivers include:

Understandable Business Model and Growth Optimization Strategy

Being able to articulate the company's business model (or better yet having a written business plan) to grow and generate superior returns on invested capital will be welcomed by all prospective buyers. If it's reasonable, it provides evidence that their decision to buy will be supported by a road map to the future and sustained success. Business models are dynamic, and need to evolve with changing economic and business conditions. When documented in a business plan and monitored/updated annually, it is further evidence of fine tuned management.

Defendable Niche or Intellectual Property (IP)

For any company with proprietary know-how, a portfolio of patents, trademarks, service marks, copyrights, trade secrets, exclusive rights or licenses, and other unique abilities, it is important to have these assets properly and thoroughly catalogued. It is also important to provide evidence that these Intellectual Property elements are properly maintained, have updated legal status and are regularly evaluated and defended against infringement or improper use by outside parties.

Broad, Loyal, Satisfied Customer Base

If you've spent years building your company, you'll want to provide ample evidence you have a significant base of satisfied and repeat customers who desire your product or service and rely on your company to provide something important to them. Well-documented customer histories, including buying volume, credit and payment experience, cooperation and contacts with key persons at the customer's place of business are the evidence buyers seek.

Stable and Upward Trending Cash Flow

Most buyers and lenders rely on historical records, primarily tax returns and P&L's adjusted to eliminate non-cash, owner benefits and one time expenses, to determine the business' ability to support ongoing operations, a living wage for the buyer, debt service and a return on investment.   It is ultimately the regular production of positive and growing cash flows that provide the underpinnings of value. Having the ability to achieve regular and sustainable growth in this area is perhaps the single greatest value driver, and again it provides evidence of superior management.

Clear and Complete Financial Documentation

The existence of well established financial data gathering procedures and the preparation of timely and useful financial statements and detailed financial reports is another high value attribute of well-run companies. The disciplines implied by their use provide evidence of focused and attentive management. Equally important, understandable financial reports provide a trust factor for potential buyers. It is also critically important to buyers and investors that a company has all of it's essential systems well documented, and kept up to date. Selling and CRM systems, accounting and finance systems, employee training and development, manufacturing, quality control, credit and collections, and facilities management are just a few areas, which when properly documented, contribute significant value and provide confidence to buyers.

Results Driven Staff and Management

Buyers are willing to pay a premium price when they believe their investment will be protected and improved upon by responsible and motivated staff and management, who take pride in producing above average results. In order to convinced buyers your staff are an "A-team", the owner must document there is a culture of setting goals, monitoring activities and results, motivating employees, and using their unique abilities and talent to deliver a product or service to a growing base of highly satisfied customers. This often requires appropriate compensation, payment of performance bonuses, and recognition for key staff and not just the owner. Evidence of good management includes low staff turnover, regular receipt of satisfied customer testimonials, steadily improving cash flows, excellent banking relationships, industry recognition, and well established staff financial incentives.

Well-Maintained Facilities and Reasonable Occupancy Costs

Finally, great curb appeal leaves a positive lasting impression. It's essential that business owners maintain the outside grounds and working areas of their facilities in the best possible conditions. Well landscaped grounds, well maintained buildings, welcoming entrances, helpful signage and neat, clean and uncluttered interiors all telegraph a message that the owner cares about the operating environment for their staff and customers alike. It costs little to be clean and tidy, but it can cost you a lot in lost value if this area is neglected.

Paying careful attention to these factors and providing documented evidence of achievement in each of these areas will mean you've embraced the concept of being truly prepared to sell and are able to demonstrate the key Value Drivers for your company.   For  more information contact Touchstone! 

Touchstone Business Listings: 

Well-Known Independent Men's & Women's Contemporary Clothing Store
- Gross $2,600,000, Purchaser to Submit Offer/Terms
- Strong History of Profits, Real Estate may be Purchased/Leased  

Independently owned retail store specializing in contemporary men's and women's clothing and shoes. In business for almost 40 years, the award-winning business is known for exceptional service and broad and unique clothing selections in categories ranging from suits and dresses to denim and t-shirts. This business has provided steady income for the owners through all types of economic cycles. The Sellers own the real estate with may be purchased or leased. This is an exceptional opportunity to own one of the metro area's premier retail stores, with opportunity to expand geographically and online.

This is a tax practice for sale in Douglas County with annual revenues of approximately $410,000. This quality practice has a well-established client base that includes corporations, partnerships, trusts, nonprofits and individual tax clients. Revenues are composed of approximately 70% tax preparation, with the tax revenues split almost evenly between businesses and individuals. Other services include annual write-up, bookkeeping and compilations. The year round revenues yield good cash flow to owner. This turn-key practice would be a great size for an addition as a satellite office or an individual buyer looking to jump into practice ownership. The client base should lend itself to further expansion of services and growth through referrals.

This Denver CPA practice for sale on the south side of town has annual gross revenues of just over 200,000. It is a well- established practice provides individual and business accounting, auditing and bookkeeping services. Revenues include (8%) from bookkeeping, payroll, and accounting services, (27%) from audit, review & compilation, and (65%) from tax return preparation for individuals. business clients, and trusts. With a solid fee structure and strong cash flow to owner of 80% of gross every year, this turnkey practice would be the perfect size and opportunity for an individual looking to transition into practice ownership.

Operating for over 10 years, this business is well-known among Grand Lake and mountain area homeowners, many of which have vacation homes, which tend to have higher turnover rates.  That creates steady demand for remodel, interior design and home decor products.  Customers choose this business for its mountain style furnishings and convenient location -- and the individual attention the store owner can offer. The business has strong relationships with suppliers and many great reference customers.    The business is being offered with the real estate, a 1,080 sf condo on the boardwalk in downtown Grand Lake, CO. The owner would consider leasing the real estate as well.  This is a great opportunity for an individual interior designer or Metro area firm to gain a footprint in the mountain market.

Colorado Springs CPA Practice

The company is a globally recognized custom digital electronics and control / systems integrator firm specializing in high- performance commercial board rooms, media projection systems, media rooms, lighting/climate control, communications, security, environmental/energy management, pre-wire and automation control systems for both residential and commercial applications. With a 23-year history, in addition to its stability/longevity, the company's strengths are its extensive scope of services, highly trained/certified staff, extensive customer base, impressive design studio and reputation as a leading design/integrator. 

This company was founded with the mission to assist financial institutions develop a sustainable competitive advantage through service quality delivery and sales effectiveness. The firm specializes in research, training and consulting solutions that improve bottom-line sales and service quality results. The firm's products include a proven and proprietary process for inculcating cultural change, service quality research via customer interviews, on-site mystery shopping and web-based surveys, a comprehensive library of basic and advanced sales, service and leadership training programs, training needs assessment process, leadership skills inventory and incentive compensation consulting. Founded in 1995, the firm has a 15 year track record of producing results for financial institutions throughout North America. 

Metal Manufacturing Die Casting Manufacturer  

The company is a Denver-based die caster, who manufactures zinc and aluminum components. Castings are small (less than 2 lbs.) and are typically produced in short run quantities of less than 1,000 per order. Customers are primarily local. In over 60 years of existence, the Company has built a strong local reputation for quality service. The Company operates from a wholly-owned production and warehouse facility which is available in addition to the purchase price. This is an opportunity for a synergistic acquirer to add additional capabilities; a strategic combination with a firm already in the die casting or a related machine shop industry; or, an individual to acquire a small family-run business with a 63+ year operating history.

Established neighborhood restaurant/bar located in renovated historic building in NE metro Denver area. Cozy layout with seating for 60 +/-, open for dinner only, catering service that may be expanded. Excellent food, award-winning recognition, full liquor license in place. Opened in 1997, current concept of fine dining with a family atmosphere is a successful stand alone model or could potentially be replicated in multiple locations. Loyal customer base is comprised of urban professionals and families from the greater Denver metro area and from surrounding suburbs. Low rent, clean books, sales have held-up well through this economic cycle. Perfect opportunity for young or established Chef with energy to take over a successful restaurant and add their touch.  

Popular upscale card, art, chocolate and gift shop located adjacent to the premier shopping plaza in Taos, NM. The business specializes in unique greeting cards of their own design and from small card companies across North America and Europe. They offer unique gifts and original art work by local artists and from around the world, as well as hand-made chocolates from NM chocolatiers. The business serves repeat regional clientele, as well as tourists visiting the Santa Fe and Taos art scene from around the world. Since its inception in 2002, the business set out to establish its retail store as the premier boutique for cards, local artisan works, chocolate creations and regional gift items in Taos. The company differentiated itself from the competition by creating their own line of greeting cards and unique product mix. Their upscale and unique mix of products give the store the feel of a sophisticated boutique. The business prime high traffic location, word of mouth and a stellar reputation, has enabled establishment of the store s brand. Growth potential exists in existing business model, as well expansion of pottery, spirituality/new age and local artist offerings and expansion of online sales.

Popular upscale flower, gift basket/gifts and  home decor shop located in an upscale retail shopping area of Denver. It has some of the  city's most prestigious individuals and  corporations as its clients. Since its  inception  in 2004, The business set out to establish its shop as the premier boutique for flower arrangements, gift baskets and gift/decor items in Denver. The company differentiated itself from the competition by using unusual flowers and offering sophisticated arrangements that were artistic and tasteful. Their upscale and unique gift offerings have established the feel of a sophisticated boutique. Word of mouth, participation in an exclusive wire service and a stellar reputation, has enabled them to establish their brand. Growth potential exists in existing business model, as well expansion of wedding and event business.