Keeping strong financial records now is a great way to prepare your business for sale. Not only does it demonstrate that your business is organized and well managed, it assures buyers your business is worth every penny your asking.
According to Bob House, General Manager of BizBuySell, business owners should prepare and review their key financial statements on an annual basis.
And, as you plan ahead and prepare your business for sale, expect serious business buyers to ask to see certain documents. Compiling these items from the last three to five years will not only impress buyers, but help expedite the sales process:
- Current and past financial statements
- Records of business purchases and bills of sale
- Statement of seller’s discretionary earnings or cash flow
- Financial ratios and trends
- Accounts payable/accounts receivable reports
- Non-disclosure or confidentiality agreements
- Marketing plans and samples of marketing materials
“While inaccuracies in your tax filings can lead to trouble with the IRS, failing to keep good financial records can also cost you big money when it comes time to sell.”