When it comes time to selling your small business and your plans are set, of course you are hoping the business sells quickly. Do you know your financial records can be the determining factor to your small business selling success?
Maintaining good financial records can help sell your small business faster and even increase the value. Accurate financials help in maximizing the selling potential of your business. Here are some useful tips to help you maintain your records and sell your business as fast as possible:
1. Selling your small business - Maintain accurate financial records
Maintaining accurate financial statements will help you to streamline your business in more than just financial ways. When you keep a track of your daily figures it becomes easy for you to spot the items that may need attention. Managing by numbers is an important aspect for growing a small business and to be familiar with the various items that the business can have, will of course provide valuable insight into areas that can be improved, increasing the profitability and value of your business
2. You can sell your business fast - Maintain presentable financial records
Maintaining a good, clear set of financial records also helps a business owner when dealing with the external accountants and tax consultants that a small business needs to work with at the end of the financial year, for filing their income tax returns and in preparing their business for sale
At the very least you need to keep a track of your
- and the cash flow generated by your business
You can maintain a daily statement in which you can track all your expenses and income for that particular day and then reference these to the actual receipts.
Tracking of income and expenses is the starting point for recording your cash flow and credit transactions. If you have incurred any expenses, then there can be either a cash outflow or a loan transaction. This can be recorded in either your cash flow or credit book. Similarly all incomes would need to be recorded either as cash inflows or debtors.
You can keep the books mentioned above by maintaining a file for the following transactions and keeping separate records for each:
- Small Business Check/cheque register: The register would show you the checks that you have disbursed along with the recipient, amount and the purpose
- Small Business Sales Journal: This will help you keep track of your cash and credit sales
- Small Business Voucher Register: This will help you keep track of how much money you owe various people and businesses, what date the payment is due and what was the purpose of each transaction
The key is to maintain your books regularly and update them on a daily or weekly basis so that you are up to date and aware of what is happening within your business.
Maximum leverage can be achieved if you build some smarts into it. This is easier than you think. For example, when you record your debtors you may build a check for calculating how quickly each debtor converts into cash and this will help you in identifying the good debtors from the bad ones and limiting exposure to debtors who take longer to pay thereby reducing the risk of potential bad debts.
Similarly you can calculate the daily cash flow that is generated by the business and project into the future using the current data. This would help you in estimating the accurate financial needs of your business and plan accordingly for the near future.
Keeping a record of your financial transactions and maintaining all your records smoothens your financial reporting and tax filing process and at the same time gives you key pointers in managing your business and of course will help you to maximize the selling potential when it comes to selling your small business.