End-of-Year Planning Can Prepare Your Business for Sale in South Florida
As the end of another calendar year approaches, many business owners will be undertaking the annual task of prepping their personal and corporate taxes. They will soon meet with their accounts — if they haven’t already — to figure out what documents are needed, how to arrange certain reports and if there is anything they can do before the New Year to reduce their tax liability.
While this time of the year often signifies an end, it’s a great opportunity to start preparing for something new. If you’re planning on selling your business, the last quarter is a perfect time to get yourself in gear for the hard push to transition from you as owner to someone else running the show.
Businesses often take upward of a year or more to sell from the time the owner makes the decision he or she wants out. That’s why the more preparation you can do early in this process, the better.
Here are some things you can do before the end of this calendar year that will position your business better for 2020 as you look to sell.
Get Your Books in Order
One of the most important things you can do if you’re selling your business is to get your financial books in order. Any potential buyer will at some point want to look at your basic and detailed financials, and he or she will want to see that everything is organized well and reported in a simple manner.
While this can be an arduous task — especially if your books are a mess — the good news is that doing it at the end of the year will serve a few purposes. In the short-term, it’ll help you prepare to file taxes this year. In the long-term, it’ll not only set you up to show your books to potential buyers, but it’ll also show you any glaring weaknesses you might have that you could work on improving in the new year.
Create Forward-Thinking Plans
The end of the year is also a time when many businesses will create short-, mid- and long-term plans. They’ll often conduct sales projections for the next year, five years and 10 years, and then cross-reference that with current financials to make decisions on business investments in things such as new equipment, office space or more employees.
Just because you’re planning to sell your business doesn’t mean you shouldn’t do the same. In fact, it’s especially important that you do this if you’re planning to sell.
These various plans will be great background information for potential buyers of your business. In fact, clearly sketched out plans will serve as wonderful marketing material for your business.
Be Careful with Your Write-Offs
Most accountants and tax professionals will suggest that business owners use the final two months of the year to make adjustments and/or investments in the business to reduce their upcoming tax liability. If you plan to purchase equipment for your business in the next 12 months, for example, it would be best to try to do so before the end of the calendar year so you can take advantage of the tax write-offs.
However, if you’re selling your business, you want to be careful about how many deductions you take this year. On the one hand, you don’t want to go crazy with write-offs, because it’ll ultimately lower your taxable income. On the other hand, making investments in the business now will reduce that burden on potential buyers in the future.
In essence, it’s a careful balancing act you must conduct. You’ll want to find the right combination of reducing your tax liability now while making keen investments that will increase your business’ value later.
Prepare Your Marketing Materials
While you’re already getting your books in order, creating future plans and weighing investments, it’s a great time to create some marketing materials, too. Again, these materials can serve two purposes.
First, you should create marketing materials and campaigns that will serve as a way to boost your sales while you still own the business. This will not only result in more income for you, but it’ll put your business in a more favorable light for potential buyers.
At the same time, you should work with outside marketing and design professionals — if you don’t already have people with these skillsets on staff — to create marketing materials geared at potential buyers for your business. This could include a slide deck outlining the potential future profitability of your business, your business’ origination story and/or a pamphlet with all your key metrics highlighted in an easy-to-consume way.
Selling your business in South Florida is like making any other type of sale: You need to highlight the benefits of what you’re selling so potential buyers will become intrigued.
Don’t let another fourth quarter pass you by without properly planning to sell your business. The extra work you put in now — before the calendar flips — will go a long way in determining how quickly you’re able to sell your business, and for how much.
Talk to a Sunbelt South Florida broker today! Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs.
Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing, Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.