Do you want to sell your online business now or in the future? While other reasons may draw buyers to your business at first, the most important factor for every investor is return on investment. To convince them, you must provide comprehensive, well-organized documentation and professionally-prepared financial records which clearly show the historical performance of your company which justifies your asking price.
Proactive preparation of financials will enable you and your broker to determine a fair asking price for your online business and also help you identify any shortcomings or discrepancies in your books
The first step towards having an accurate valuation of your online business is the preparation of your financial statements for the past 3 years. It’s a much smoother process to sell your online business if your business records are in order. Otherwise, you must put in the time and effort to pull together all the documents and organize them properly before going to the market. It will be worth your while because it will facilitate a seamless selling process.
It’s advisable to hire a CPA to ensure that your financial records are solid. A CPA can help organize your books and ensure that your financials are done correctly and error free. Additionally, buyers believe financials prepared by a professional CPA are more accurate and going to be easier to verify during the due diligence process.
The following documents should be prepared before listing your online business which will be needed during due diligence:
- Profit & loss statements for the current and past 2-3 years
- Cash flow statement
- Current balance sheet
- Business tax returns for the past 2-3 years
- Copy of the current lease (if any)
- Insurance policies
- Any supporting documentation to validate the financials
- Supplier and distributor contracts
- Employment agreements
Preparing your financial records will enable you to develop strategies that can improve and increase your business value.
In addition to helping you determine a fair asking price for your business, preparing your financial records and checking for any errors will also help you identify potential weaknesses and develop strategies to improve and grow your business. If you are considering selling your online business in the future, why not take steps to increase the value of your online business now?
Now is also the perfect time to hire a professional online business broker. Having a relationship with an online business broker will help you learn market trends, know what buyers want in a business, and strategies to make your business more sellable. With the help of an experienced online business broker, you can easily determine the best time to list your online business and a fair asking price.