Prepare Your Business to Sell: Tip #3

cash flow sell your businessSo far, our series on "Preparing Your Business to Sell" has covered three important topics. We began by learning that you as the business owner must adopt a strategic mindset with which you prepare your business to sell. We followed that post with the first tip – or step – in preparing a sellable business, which is clarifying your vision. Before you can start to get your business sellable, you have to know what you want it to look like on the day you sell it. The second tip is to meet with your CPA. You should do this as early as possible and with an accountant that has experience with succession planning. Today we are discussing the third step in preparing your business to sell.

Tip #3: Improve Your Cash Flow Position

A strong cash flow position is critical to garner the top selling price for your business. The most obvious question that any prospective buyer will ask is, "Does this business make money?" You not only want to be able to show the profitability of your company, but you want to demonstrate a short cash flow cycle. The more working capital a prospective buyer must put into your business, the less they will be willing to pay you for it. To shorten your cash flow cycle, charge your prospect up front, or at least in staged billing. That way, you get paid as much as possible before the customer buys the products or services you are selling. As a business coach in the Houston area, I help business owners grow their businesses, systematize their businesses, and bring greater balance to their lives. Throughout this process, I help them improve their leadership and their mindset. To learn more about the mindset that is needed to build a business you can sell, see the first post in this series titled, "Do You Have the Right Mindset to Sell Your Business?" If you are interested in having a conversation about preparing your business to sell, contact us today.

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