How Outsourcing Your Bookkeeping Can Help with Your Small Business Exit Strategy
Congrats! You’re a successful small business owner, but now you’re starting to think about moving on or retiring. Whether you’ve been in business for one year or 25 years, you need to plan your exit strategy. What do you want to do with your small business? Walk away from it? Sell it to someone else? Merge with another business?
Do you have an exit strategy?
An exit strategy is a part of your business plan, which details your strategy for your business when you retire or leave, or if the business fails. An exit strategy helps to protect you and your business. It also shows investors and lenders how their money is protected. And, if your business fails, it helps ensure a smooth transition. An exit strategy is a living, breathing part of your business plan that you need to update regularly as your small business grows and the market changes.
By outsourcing your bookkeeping, your bookkeeper can help you determine some of your exit strategy options since they have a keen financial insight into your business. Plus, they can help you prepare to sell your business.
Some things your outsourced bookkeeping firm can do to help you sell your business include:
Determine the Financial Value of Your Business
If you plan to sell your small business, the one thing you need to know is how much is your business worth. Once you have that figure, you’ll know how much to sell your company for. The Payroll Department, a bookkeeping services provider, can help you gather the information that will be used to determine your company’s financial situation, market position, and any strengths or weaknesses that may impact that figure. The benefit of outsourcing your bookkeeping and having them assist in conducting this valuation of your company is, it provides an unbiased, third-party estimate of your company’s worth. Plus, an outsourced bookkeeping firm can help you identify areas of concern that buyers may have, such limited market growth, slow inventory turnaround, or sizeable executive compensation spending.
Prepare Your Books for Prospective Buyers
Buyers will want to see your financial information before making an offer. Therefore, you need to have your accounting records in order. An outsourced bookkeeping services provider, like The Payroll Department, located in Brownsburg, Indiana, can help you keep a good set of books that have been audited regularly. By outsourcing your bookkeeping to a third-party company, potential buyers will consider your financial information to be more reliable. This provides them with a better impression of your company.
Identify Your Business’s True Profits
Potential buyers want to know your company’s true profit numbers – not your revenue. A professional bookkeeper, like Grace Walker at The Payroll Department, can produce your company’s profit-and-loss statement each month as well as a balance sheet. She can also prepare a buyer’s analysis of your company’s profits, which excludes non-operational (such as a car lease) and infrequent expenses (like moving or unusual legal fees, etc.)
Outsource Your Bookkeeping to the Experts
If you need help getting your company’s financial processes in order as part of your exit strategy, contact Teresa Ray at The Payroll Department. Teresa can talk with you about your company’s needs while sharing some of the benefits you can receive by outsourcing your bookkeeping to us.
Remember: A proper exit strategy begins with preparation. Call The Payroll Department today at 317- 852-2568 for more information.
– Ariane of The Payroll Department blog team