| Buyers always want to know how long the | | | | over the years. But, there is a difference |
| business has been around | | | | between your financials as reflected by your tax |
| Jeff Slaton says "A business with a long track | | | | records and your true financials. Tax records are |
| record means there are good reasons for that | | | | not designed to show a business in the best light |
| business to be operating. It will be well known in | | | | when it comes time to sell your business because |
| the area, and people will be used to patronizing | | | | no one likes to pay more taxes than they have |
| the business or using its services. The longer it | | | | to Generally, tax returns are a worst case |
| has been in operation, generally, the better the | | | | scenario. The buyer needs to be shown which |
| business. They will also want to know about the | | | | expenses are non-cash items, such as |
| employee situation, especially any key | | | | depreciation, and business use of home and |
| employees". | | | | vehicles. An accountant or business broker can |
| They also want to know how long the seller has | | | | help you with this. Then, your financials can be |
| owned the business | | | | recast to reflect its "True Net Income". Sure, a |
| The longer the present owner has been in | | | | buyer will see the tax figures, but only after also |
| business, the more likely he or she has been | | | | seeing the differences between the two ways of |
| successful. People don't stay in business if they | | | | accounting and identifying what the "True Net |
| are not making money. They may want to know | | | | Income" is. |
| why you bought the business in the first place | | | | Buyers will value a business on reported income |
| and compare that against your experience having | | | | only |
| owned it. | | | | Buyers can consider only the income that a seller |
| Buyers always want to know why you are selling | | | | can show them. Although not reporting all income |
| your business | | | | is against the law, we all know that cash type |
| A prospective business buyer will usually want to | | | | businesses sometimes do not report all income |
| know why you are selling your business. They | | | | for tax purposes. This "underground economy" |
| know that business owners sell for a variety of | | | | has been well documented and is in the billions of |
| honest reasons, but sometimes not, so a savvy | | | | dollars. Sellers may tell a prospective buyer about |
| buyer will want to be sure he knows why you | | | | how much they are "skimming," but wise buyers |
| are selling. You need to be ready to honestly | | | | ignore their statements, since they have no way |
| answer that to the buyer's satisfaction. If the | | | | of proving these amounts. As you would expect, |
| owner of a business has been in business for six | | | | buyers base their buying decisions on what they |
| months, is 37 years old and wants to retire, the | | | | know for sure. Business owners that report their |
| buyer will be suspicious. The more valid the | | | | sales accurately may pay more in taxes, but their |
| reason for the sale, the more realistic the buyer's | | | | businesses sell at a higher value because they |
| offer will be. Why you are selling is an important | | | | show greater income. Virtually all buyers figure |
| question-consider your answer carefully. | | | | that a business will sell for less than the asking |
| Why Books and Records are important | | | | price. Expect that. Buyers will want to negotiate, |
| A business buyer will want to investigate your | | | | sometimes aggressively. That's where a good |
| financial track record and brand equity. They want | | | | business broker will be worth his salt. When selling |
| to know that they can easily pick up where you | | | | a privately held small business, pricing is as much |
| left off, without suffering any financial setbacks. | | | | art and marketing as it is fact and financial history |
| The financial records of your business are a good | | | | at times. |
| indication of how well the business has been doing | | | | |