In Part 1 we covered the first 4 ways to maximize value now to sell your business for maximum profit. Here are the last 3 ways, not less essential.

There are no choices here. All 7 are critical to make your business buyer ready and buyer attractive so you walk away with the most money from selling your business.

5) Reinforce Legal Affairs and Contractual Relationships

Buyers want to know about the ownership and structure of your business. They want to see the materials, documents and binders that demonstrate that you have you been compliant with all regulations that apply to your particular business. When it comes to contracts with customers and vendors, what is their status? What is outstanding? What is their lifespan?

6) Systemize Everything

If most of the value in your business is in your head and if most of the operational procedures for your business are in your head too – then that value is not measurable and quantifiable as business assets a buyer will pay for. The more business value you can document, the more value you can demonstrate is in the business, independent of you, the easier that value is to measure and add value so you can get more money out of the business.

Department manuals, documented procedures, a company operations manual, a contingency plan for everything, these all are measurable tools that demonstrate how much of the expertise, intellectual property, processes, systems and other details are part of the business, not just in the owner’s head. These materials do not have to be extensive, expensive or elaborate. Just cover the basics to demonstrate the business is fully operational without your day-to-day presence.

7) Delegate Operational Responsibility to Your Management Team

Along with documenting everything, you must prepare your key management team to be positioned and ready to handle all the buyers questions and concerns after the sale when you are gone. the buyer needs to know who your successor(s) is, who they can rely on during their transition after the transaction.

When you actually commit to sell your business, you want to be sure you can maximize the sale and get the most money for your reinvention. For most business owners, they’ll only do this once, so it becomes the most critical time in their career and their life.

It’s essential to make the business buyer ready and buyer attractive to be in the strongest position to maximize the valuation that will be the basis of that sale.

These seven steps are only a start toward higher profits when you exit your business. The earlier you start, the more profit you’ll make. If you are determined to sell your business for maximum profit, start planning your exit now.

Kerri Salls
Exit Strategist

Goal Achievement Expert

Well before it’s time to sell your business, you must ask start asking the question: “What am I doing to increase the value of my business to a potential buyer?” Start asking this question 2-5 years before your target exit date.  To sell your business for maximum profit, answer the question in these 7 areas:

1. Your Business Value

The value of your business extends beyond the books and cash flow statement. Prospective buyers will want to know exactly what the business, assets and future potential are worth. It’s important to think through now which assets will remain part of the business and which assets you will retain ownership of; which assets will be included or excluded from the sale.

Doing your own mini-valuation early helps you set expectations and set some goals of what you want to achieve before a real buyer comes knocking. Knowing the range of your business value ahead of time also helps you set exit goals and your strategy to fulfill your reinvention plans beyond the business.

2. Purge the Business of Worthless Inventory and Debtors

Out-of-date stock, bad debts, difficult customers, all draw down your valuation number. So, why would you hold on to them? If you are serious about making the business buyer attractive and holding on to every bit of value you can, then take action to get the old stock, bad debts and difficult customers off the books. Get rid of them. Clean house and write them off.

3. Clean Up Financial Records

Buyers do more than kick the tires. They want to know everything. And they will ask lots and lots of questions, especially financial questions. They expect you to answer everything and anything about the financial reporting side of your business. This includes balance sheets, assets and liabilities and your tax position and strategy. Not only do all of these financial reports need to be clean and ready to view when you’re selling your business, they need demonstrate a history of at least two years of being clean, current and complete.

4) Audit Your Books

There are three levels of financial statement review by outside professionals. The closer to the targeted actual sale date, the more thorough and verified the examination must be. Compiled financial statements should start at least three years in advance, move up to reviewed financial statements starting two years before a sale transaction and audited financials the year leading up to a sale. You will need to request that your CPA audit your business records to include extensive verification, confirmation, and performance. Providing an evaluation of your internal controls will be helpful to both you and the buyers, and can be a means to demonstrate added value.

To avoid exit planning errors and pitfalls that could potentially derail your exit transaction, email me with any questions you may have.

Kerri Salls
Exit Strategist 

Goal Achievement Expert

Financial researchers report that 75 percent of U.S. businesses never sell. Worse, anecdotal evidence from the closing attorneys puts the number closer to 90%! You do the math!

When you look at all the time, money, effort, heart and soul that entrepreneurs put in to their business, it’s wrong that they rarely walk away with all that their business should be worth. Entrepreneurs are settling for only 50-70% of what their business is worth, just because they didn’t know how to maximize the value so they can get the most money when they finally get out.

Too often, because of procrastination, a lack of planning, no contingency plans or succession plan in place and being implemented, business owners are simply closing their doors and liquidating assets to cover expenses. They have not prepared the business for a buyer so they are not visible to prospective buyers.

There are many ways to exit your business that don’t leave you with nothing to show for your talent, expertise and all the success you’ve achieved over the years.

With discipline and foresight, every business owner can easily take steps to achieve maximum perceived value making the business attractive for a potential buyer. Do the math! You can multiply your profits when selling a business by two and by ten. The difference depends entirely on your efforts to maximize the value in the business itself.

If you have any questions relating to exiting your business, please email me. I’d be happy to assist in whatever way I can.

Kerri Salls
Exit Strategist 

Goal Achievement Expert

Tomorrow – Tuesday, May 15

Fast Forward To Your Exit on Your Terms

Do you intend to sell/scale your business in the next 3-5 years? Will you be one of the 5% prepared to successfully exit and transition to your reinvention — or not?

This Way Out is a half-day seminar presenting the overriding challenges CEOs must confront if they expect to cash out a private business.

You’ll leave this full morning session knowing:

• 7 core questions to prepare to exit your business
• Your readiness score to sell/scale your business
• 10 key questions about succession to ask now
• A range of exit options to explore
• Exit Criteria, Exit Planning and Exit Strategy Stages
• Timeline incentives for maximum valuation
• Transition to Reinvention criteria and parameters

Kerri Salls, exit strategist, speaker, writer, MBA and CEO of Breakthrough Enterprise LLC will present This Way Out at the Sheraton Tara in Framingham, Ma on Tuesday, May 15.

Join us for the crucial content you need to shape your decisions and timeline to achieve your exit and reinvention.

Learn how you can exit your business on your terms, on your timeline. Register for $47.

Who Should Attend

Established Business Owners of privately held firms who are exploring when and how to exit their own business

Expert Advisors who assist business owners to sell or scale their business

Register here.

Don’t miss it!

Goal Achievement Expert

Plan Your Exit From the Outset                                   

Kerri Salls, exit strategist, speaker, writer, MBA and CEO of This Way Out LLC will present Sell Your Business For Maximum Profit at the Sheraton Tara in Framingham, Ma on Tuesday, May 15.

Questions or comments? E-mail us or call             508.820.3322

Goal Achievement Expert

To make the business transition easy, you must prepare the business to be an attractive asset for the buyer. It’s your job to prepare your business to be sold.

When you decide to cash out and move on to your reinvention, the transaction experts you engage  (attorneys, accountants, brokers, investment bankers, wealth advisors) all expect and assume you’ve already done the preparation, the ‘staging’ for prospective buyers’ due diligence.

Below are eight questions to consider to ensure an easy and profitable sale when you exit the business.

Is Your Business Ready to be Sold?

1.  ___ Do you have a history of consistent sales and profit growth?
   Documented history of sales, profits and growth which you can show buyers provides proof that can be used at valuation.
2. ___ Do you have at least 2 years of clean financials?
   Your bookkeeper and accountant don’t see the whole picture. You have other assets and contracts. All of these will be reviewed and valued. You can’t hide anything from buyers or brokers.
3. ___ Do you have a foundation of robust systems, processes and structure and are they fully documented?
   Does your business run on consistent processes and procedures or do you run it out of your head?
   To be ready to be sold, all systems, structure and strategies must be documented.
4. ___ Do you have projections showing increasing value for the buyer long after you exit?
   Buyers don’t want to buy an old tired business on its last legs. They want to know there’s more life, more opportunity for them to make a good profit for years after your exit. Can you prove that opportunity?
5. ___ Are you ready to make the necessary changes to make the business buyer attractive?
   How much time, effort, and expertise will you invest back into the business now, as you get ready to move on? Are you willing to set the business up for even greater success without you at the helm?
6. ___ Do you know what makes your business buyer attractive?
   You must know what it is about your business that makes it valuable enough for someone else to buy it. This is the biggest sale of your life – selling the business you built.
7. ___ Do you know what makes your business successful in your market?
   Be sure the value is in the business and not just in you the owner.
8. ___ Are all your stakeholders prepared for the transaction?
   Just because you are prepared for the exit transaction on your terms and you’ve planning your transition to reinvention, doesn’t mean all your stakeholders are on the same page with you. Before you get to the transaction, be sure all business stakeholders support the transaction so you indeed can make a successful exit from the business.

Many CEOs prepare themselves for their exit and forget to prepare the business. That can make for a very tough transition for the business, clients, team, and suppliers. All of these challenges are totally avoidable if you prepare the business for the exit transaction while you prepare yourself for your exit transition.

If you have any questions relating to exiting your business, please email me. I’d be happy to assist in whatever way I can.

Kerri Salls
Exit Strategist 

Goal Achievement Expert

“Business owners who are too involved with every decision made at their companies might have a harder time selling their businesses, experts say. For this reason, small-business owners should be sure to delegate decision-making authority. It’s also important for business owners to get a realistic idea of what their companies are worth before it’s time to exit. ” Here are 6 exit planning errors you can avoid.

Preparing to Leave

by VERONICA DAGHER

Many small-business owners are waiting for the day they can cash out and retire. But they’d better do more than just wait.

The mistakes are:

1.   Creating a Business That’s Too Dependent on the Owner
2.   Ignoring the Tax Benefits of Planning Ahead
3.   Incorrectly Valuing the Business
4.  Rushing to Accept a Rich Number
5.  Hiring Your Brother-in-Law to Do the Deal
6.  Underestimating the Emotional Impact of Selling a Business

Check out Veronica’s great article here for the fix to prevent each one.

Kerri Salls
Exit Strategist 

P.S. To avoid exit planning errors and pitfalls that could potentially derail your exit transaction, email me with any questions you may have.

Goal Achievement Expert

Quick, simple, and cheap – will shortchange you when selling a business.

Are You Ready To Sell Your Business? Is Your Business Ready To Be Sold?

These are not the same question although the answers must be consistent.

Have you thought about the former but assumed the latter to be true?

Are you prepared to let go of your business, to get out now? Physically? Logistically? Financially? Emotionally?

That’s a series of discussions right there that you must address before you can sell your company. Those are questions you will address as your team, your broker and your family ask them.

But What About The Business Itself?

What have you done to make the business buyer ready or buyer attractive?

What have you done to prepare the business not just you for this transition? You’re transitioning to your next adventure, venture or avocation. Your business will transition to new ownership in a financial or strategic sale. These transitions can be easy or very tough.

Exit transitions for you the owner can be easy when you have a detailed plan for your next adventure, avocation or indeed a new business – something to look forward to, something to plan for on your terms. Your exit transition can be tough when you ignore what comes next, leave your reinvention as a black hole that will magically fill itself in or don’t communicate with the most important people in your life about how this transition will impact them.

For the business itself, these same issues arise. Allowing the business and your team to transition smoothly and successfully to new ownership is your responsibility. Indeed, that successful smooth transfer is a key to the value a buyer will pay for.

To make the business transition easy, you must prepare the business to be an attractive asset for the buyer.

Need one-on-one help to grow your business? Contact This Way Out Group LLC at www.kerrisalls.com.

Kerri Salls
Exit Strategist 

Goal Achievement Expert

There are many aspects to exit planning that business owners take for granted, never think about, or abdicate to others. This naiveté is one of the biggest roadblocks to getting out on terms that give you the full value of the business. To tame the beast and make it absolutely manageable for any business owner, here is an exit planning financial snapshot of six core elements to consider on the financial side of exit planning:

1. Setting Financial Goals
   Your long-term income needs and the financial requirements of your reinvention (new venture, avocation, adventure, hobby). From these financial requirements, you can determine the sale price and terms you want your business to deliver when you exit. Initially, these two numbers may not match up. That’s just one good reason to start planning early.
2. Current Value of the Business
   To be buyer ready, you should always know the current value of your business. You won’t be disappointed by a buyer’s offer if you know the current fair market value of your business. Valuation experts analyze the business books and other materials and compare its profits and losses to relevant businesses in your region and/or industry. With the current competitive value in mind, you can track your timeline to exit on your terms and meet your financial goals.
3. Build Business Value
   To exit early and maximize the value you walk away with, it is imperative to always be building business value. If you are always adding value, accelerating growth and making the business more buyer attractive, you will have the opportunity to exit with the financial freedom for your reinvention. If you have not been building value all along, start now so that you can sell the business for what you know it’s worth and meet your long-term financial goals.
4. Selling a Business
   Selling a business has many parallels to selling a house. Once you decide to sell and the business is buyer ready, it can still take 6 months to 2 years to close a transaction. Before you must sell (for any reason), consider all your exit options, all possible buyers and the impact of each option on your exit, on the future of the business and the future employment of your team with the business. Before you choose a specific option, also investigate the tax impact on you and the business. The tradeoffs can be severe.
5. Contingency Plans
   Murphy’s Law – if something can go wrong, it will. The same is true for your business, as well as your exit from the business. Knowing this up front, is another incentive to start early and aim for an early exit. You want to build a contingency plan for the business in case of any crisis or emergency. For example: you need an emergency plan documented with a copy kept totally offsite – if for any reason you can’t get into your offices, you lose power and can’t access computers or passwords, there’s a fire/blizzard/hurricane that destroys your business, etc. Plans line these and plans for other types of unexpected situations should be built right into your business exit plan from the outset. You also need a documented contingency plan in case you, the owner/CEO, become physically or mentally disabled, have a heart attack/stroke and are laid up for six months or even worse, if you should die. Additionally, your contingency plan must include all current buy-sell agreements, services, resources, client orders, employee contracts, key employee incentive programs, business/disability/life insurance policies that are in effect.
6. Life and Legacy Beyond Business
   With your comprehensive business exit plan and strategic contingency plan in place, you can explore and consider options for reinvention alongside your estate planning goals to leave a legacy and secure your dynasty. Much of your financial independence beyond the business as well as your estate planning are tied to the sale of the business (aka a liquidity event). You have more estate planning options, more tax advantaged options and more ways to maintain the owner benefits you enjoy; if you start this planning early – ideally, five years before you can fund those options at your exit.
   Your financial position, holdings, and control over the business and those holdings, will change drastically and instantly once you sell the business. Therefore, you must revisit your personal financial plan and your estate plan at each business milestone of the exit process. As you make choices for exit options and reinvention opportunities you want to pursue, be sure to circle round to be sure they still coincide with your business exit and contingency plans.

Stating the obvious, this is not a complete discussion of the financial aspects of exiting your business. It does however give you a general outline of the scope of the financial issues to address with various key experts on your team. Just on the financial side, you can begin to see the value of starting now, planning early and preparation to maximize the value of your business when you want to get out.

Kerri Salls
Exit Strategist

P.S.  If you have any questions relating to exiting your business, please email me. I’d be happy to assist in whatever way I can.

Goal Achievement Expert

Press Release

Exit Strategist Warning Shocking 95% of Massachusetts Middle-Market Business Owners Have No Exit Strategy

(Framingham, MA) April 25, 2012  Kerri Salls, a leading visionary strategist in New England with a compelling message that more business owners need to hear and act on, is raising awareness that fully 95% of all local business owners do not have an exit strategy, a way out, when they want to move on to their reinvention. She’s out to change that. On Tuesday, May 15, at the Sheraton Tara Conference Center in Framingham, MA, Kerri will present a half-day seminar on the overriding challenges CEOs must confront if they expect to cash out a private business in order to fund their next venture, adventure, avocation, or hobby – formerly known as retirement.

Business owners are not retiring to a rocking chair or the golf course any more. They intend to transition to what’s next on their bucket list. What they don’t know before it’s too late is hurting them. Only 5% of all business owners plan ahead. As a result, when they do exit, they walk away with only 50-70% of the value of their business.

It doesn’t have to be that way. In a seminar entitled, This Way Out – Fast Forward Your Exit on Your Terms, Kerri Salls, Exit Strategist at This Way Out™ Group LLC, will offer seven ways to increase the value of your business before it’s time to exit; proven exit strategies that expand your options based on the lead-time to your exit; and the 5 stages of an exit strategy. She will share compelling incentives to maximize the value of your business as well as criteria and parameters to initiate your transition to reinvention. Details and registration at http://myeventguru.com/events/10173/ .

Your exit strategy (or lack of one) impacts every decision every day. Statistically, only 10% of all businesses complete a successful sale or succession transaction. Kerri assists small and medium size businesses mitigate that risk. Kerri says, “Attendees will learn what nobody is talking about that business owners need to know now, if they expect to exit their business on their terms on their timeline”.

Kerri Salls is an exit strategist, goal achievement authority, speaker, and mentor who prepares owners and entrepreneurs for their optimum exit. She helps businesses establish a strong foundation to accelerate growth, maximize value; and craft an exit strategy that creates wealth.

A visionary with 40 years experience, Kerri works with owner/entrepreneur/CEOs to achieve their life’s dream in business and beyond. She helps fast-track entrepreneurs integrate strategic planning as part of their business operations and exit strategy from the beginning.

Owners, ready to transform their expertise into massive results, gravitate to Kerri to solidify their mindset, skill set and sound business knowledge through her unparalleled Exit Strategies for Wealth™ system. More information at http://kerrisalls.com

For more on this Breaking News story dial Kerri Salls on 978.270.1524 or e-mail Kerri@KerriSalls.com.  Kerri credits her insider’s view of two successful family business exits, MBA theory & almost 40 years hands on experience transforming lives as the catalysts for her knowledge, wisdom, and insight that she wishes to share with your audience.

(Courtesy Video Link: http://youtu.be/fZs_nZYJTMY )

Kerri Salls
Exit Strategist 

Goal Achievement Expert