You Must Always be Ready to Sell Your Business
Most people contribute something to RRSP’s and/or other investments on a bi-weekly or monthly basis. Regardless of how small the investments may be, we can expect to receive monthly reports on the value of our holdings along with details pertaining to progress made toward our individual goals. In fact, in the digital age, many of us might also demand real-time updates accessible online, or via a mobile application.
Wouldn’t You Like to Know What Your Business is Worth, Right Now?
For some reason, however, when it comes to privately-owned businesses the majority of owners are content with staying oblivious to the value of their business, despite relatively tremendous investments of time and money. Lou Celli, CA, CPA is Grant Thornton LLP’s Leader of Privately Held Businesses in Southern, Ontario, and he would like to know why this is. As a Partner at Grant Thornton LLP Lou has been helping business owners realize the value of their businesses, and helping them to make the right strategic decisions so that all of their hard work pays off. “The problem,” states Lou, “is that business owners cannot expect to know when the day is going to come that they sell their business.” Whether it’s a global competitor knocking on your door one day and saying “How Much?” Or, god forbid an unfortunate health issue that forces an owner to make an untimely decision, you just do not know when the day might come. That’s why Lou insists that business owners need to start preparing now, and be ready to sell at any time, and he explains why.
Like the Family Home, Businesses Need to be Cleaned up Before being Put on the Market
Not all prospective homebuyers that walk into an open house to find dozens of scented candles and pleasant background music will realize that the home smells and the floors creak. But when it comes to the sale of your enterprise, you can assume the potential buyer is going to do a better job at sniffing out your business. If you are preparing to sell a home, the first thing you do is fix up the landscaping and add a coat of fresh paint to the kitchen and bathroom. Likewise, when you are getting ready to sell a business you’ll want to improve the appearance of your track record in order to maximize the value you receive for all you have invested over the years. Ideally you’d like to have at least 3 years of solid financials, and sell when your neighbourhood is hot, but you also need to tidy up your balance sheet which could mean moving around certain assets and/ or removing bad debt.
Owners Cannot Accurately Predict the Value of their Own Business
Without having someone taking a look “under the hood” you may find that your business is not as transferable as you had thought, and you certainly won’t have a realistic idea of what your business is worth. In any case getting your business ready for sale will not be a painless process, but it can be a lot less pain if you work with professionals like Lou that can help you make the decisions that will lead to a more favourable valuation of their business when the time comes to sell –whether planned, or not.
Attend a Free Government Funding and Tax Advisory Workshop
Mentor Works has partnered with Grant Thornton to bring owners and leaders of small to medium-sized businesses free informational sessions on how to access government grants and loans, as well as to learn more about tax advisory services offered through Grant Thornton LLP. Stay informed of upcoming events by signing up for our Canadian government funding weekly e-newsletter.