Can you sell your art, antiques, or collectibles business while competing with the multitude of other small businesses also being sold?
By the year 2029, $10 trillion dollars will change hands due to the baby boomers selling their businesses. At the same time, the U.S. economy is losing manufacturing-related jobs, which means that more than ever folks will be joining the ranks of the self-employed, starting, growing and wanting to sell their business. If the market is saturated with businesses for sale, you need to put your best foot forward.
The Wall Street Journal (Janauary 8, 2008) published an article describing the lack of readiness of many business owners to sell their companies. This article, “Want to Sell a Business” was addressed to the owners who want to sell their business and retire on the proceeds.
I know many antique, art and collectible business owners who are so tied up with the day-to-day business operations that they never look to the future to ask what will my business be worth when I’m ready to sell.? Can I retire on what the business can be sold for? How can I make the business more valuable? What’s my exit/sell strategy? The result? Most entrepreneurs are disappointed in their business value.
Many entrepreneurs, by their very nature, do not enjoy bookkeeping. They don’t take the time to understand the financial planning and bookkeeping that are necessary for banking and long-range planning. Too often small businesses do not have balance sheets and income statements prepared annually. Instead, the business income and expense is reported for income tax purposes on the owner’s income tax return. But by not preparing balance sheets and income statements, the business financial data is lost.
Here are three significant things you can do to enhance the value of your business:
1) long-range planning 2) keeping proper records and 3) developing and following an overall business plan.
Take the time to understand the financial aspects of your business and make sure you understand your bookkeeping process. You may not want to but you should be able to do your own bookkeeping and you should certainly be able to answer bookkeeping questions that a potential buy may ask.
Prepare annual balance sheets and income statements
A long history of professionally prepared financial statements will enhance the value of your business and help educate you (the owner) so you can make informed judgments for business improvements and increased profits. When it comes time to sell your business, the financial records will instill a sense of confidence in potential buyers. Most potential buyers will demand proper financial records.
Develop and follow an overall business plan
Developing and following an overall business plan is important in order to set goals for growth, profits and your retirement after the sale of the business. It is also a document that will help your potential buyer understand the current and future value of your business.
The antique, art or collection business has been good to you and will be better when you take steps to enhance its value.
One note of caution: All of the business income must be reported. Cash sales put in the pocket and not reported will never give you the business value you deserve.
- Jim Sturgill is a director of WorthPoint and Founding Partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.