Most of us are all ready to kiss 2020 goodbye, and with the dawning of the new year, many business owners will be making the move to put their businesses on the market in January.
If you are one of those business owners who is planning to sell come the new year, then now is the perfect time to start planning, organizing, and getting everything from 2020 wrapped up.
Get Your 2020 Financials Up to Date
As soon as the clock strikes midnight on the 31st, you will be able to get your December financial records entered, reconciled, and off to your accountant so that they can start preparing your 2020 tax return. The sooner you can get your 2020 tax return prepared the better, because buyers will want to see it when they are doing their Due Diligence. The last thing you want to have to do is extend the Due Diligence period because we are still waiting on the CPA to finalize the returns.
Do yourself a favor and get your books current to the end of November, so that when the new year rolls around, all you need to enter is December, and you are ready to go. If you aren’t up to date with your financial records, get started on that project now, so you will have the numbers to share with your business broker for your valuation, as well as any future buyer prospects.
Get All W2s and 1099’s Out ASAP
Employees and independent contractors need to receive their W2s and 1099s by January 31, so why wait until the last minute to get those out or initiate the process with your payroll company? Get those out the door the first week of January and you will be all-set, checking that item off if your list.
Request PPP Forgiveness
If PPP loan forgiveness is available through your bank, make sure to get that application in ASAP. The process for getting the loan forgiveness could be a long one, depending on different circumstances (our bank is telling us 60 days for them to process the request, then 90 days once they send it off to the SBA), so you want to get the ball rolling on that sooner rather than later. You don’t want to have to deal with this extra issue during a business sale, so if you can clear it down now, it’s a good idea to take care of it.
Document Processes and Procedures
One of the most salable assets of a business is its processes and procedures. If you don’t have everything documented, there is no better time to start. What are the key roles in your business, what are the specific responsibilities of that role, how are those responsibilities to be performed, what are the step-by-step processes that make your business function so efficiently? Those processes and procedures are tried and true, and frankly, they are a big part of why someone would buy an existing business vs just starting their own from scratch.
You can work on this documentation or you can have each employee document their role. However, you do it, just make sure that it gets done. That way you have a training manual for new employees and a playbook to handover to the new owner. This will be extremely valuable to a buyer, and it’s something that will take some time to compile, so don’t wait to get started on it.
Prepare In Advance
Our team is talking to many different business owners right now who say, “Call me in the new year, I will be ready to sell in January.” And the truth is, the process to get your business listed can take several weeks, from the initial valuation, to the listing paperwork, to the creation of all of the marketing materials (including video production), to the advertising of the listing, and the sooner we can get started on all of that, the sooner we can start finding a buyer for your business. So, if your goal is to sell your business in the new year, now is the perfect time to get the ball rolling. Call your business broker and work with them to help you prepare to get your business ready for sale now.