Strategy #1 Employ a plan to increase sales and cash flow
Your cash flow and profitability are the strongest indicator of the total value of your business. If buyers believe they must inject cash into the business after acquiring it, they will lower any offer they make. Potential buyers want to see at least three years of financial information. If you sales history reflects a decline from year to year, they’ll expect to purchase your business at a deep discount.
When you take the time to analyze obstacles to your sales and cash flow, you’ll be surprised to find many are truly self-inflicted. Production efficiency, basic cost reduction, operational effectiveness, efficiency of your collections – – these issues are within your power to fix. For example, a 1% increase in efficiency can result in as much as a 5% increase in profits. Improvements in your collections will improve your cash flow and reduces the possibility of bad debt issues.
Buyers are interested in performance not potential. Increased cash flow translates into high selling price.