When it comes to selling your online business, nothing can derail the sale faster than the lack of accurate financials. After all, any company that wants to buy another company is going to want to look at the financial records in detail. Those records let prospective buyers know what kind of risk they are taking or could potentially face. Will they be able to run the company and expand it? Will they run into financial trouble in their first year?
The only way they’ll know this is by the selling company offering prospective buyers detailed financial records for them to review.
Potential Buyers Have An Idea Of Possible Return On Investment
Why do companies buy a business? Believe it or not, it’s not just about the professional or emotional connection to it. It’s actually about the return on investment they will get. Every buyer will look at the return on investment for their purchase.
If you can’t give them comprehensively, organized financials for them to look at, it doesn’t matter how connected they feel with the online company; they’re not going to purchase it. Clean financials boost their perceived value of your online company.
You Come Across As Trustworthy and Reliable
Clean, stable financials alleviate potential buyers’ fear that you’re unorganized and unable to effectively transition the business to them when sold. With stable financials, you demonstrate to them that you’re in control over everything in the business. Buyers are put off by disorganized, incomplete records, and are unlikely to invest any money in buying the company.
With organized accurate financials, prospective buyers know whether or not there is room for growth in your company. Remember, they’re going to be concerned about the return on investment, and further with part of that ROI goes to growth.
Clean Financials Means Fewer Expensive Mistakes
When you have clean financial records, it likely means you haven’t made many, if any, mistakes with your company’s finances. Potential buyers will see that you have made every effort possible to keep the business afloat and have been confident in the decisions you have made. With mistakes averted in your financials, it means potential buyers have an understanding of what your work ethic is and how important the business means to you.
This boils down right back to point number two – trust and reliability.
Where Your Financials Could Be Lacking For Potential Buyers
Financial records may not be a strong suit for you, but if you’re going to sell your online business, they need to be. When you want to sell your business, be sure you clear up any of the following problems:
- You lack readily available monthly financial statements. You’re not tracking your financials or are behind in getting them ready. It’s important to have current financials.
- You can’t track your revenue with expenses monthly. You should know that your revenues are meeting your expenses each month, as it provides you a better glimpse of the company’s profitability.
- You have complex financial records that someone outside your company isn’t able to easily understand. If an entity is looking to buy your company, you want them to easily understand your financials and know how the business is doing with expenses categorized correctly.
What To Keep In Mind…
Your primary job as a business owner who wants to sell their online company is to give a potential buyer every reason why they should purchase your online company. Giving them clean financials is a surefire way to show them that your company is well managed and likely to increase in value – it tells them your company’s past and present and possible future.
An Internet business broker can provide you with insight of your company’s financials. They’ll be able to tell you where you’re lacking and what improvements need to be made. They can ready your company for sale while also finding prospects interested in buying your company. If you want to sell your online company, reach out to one of our online business brokers today.