In this video, we talk about "WHAT" it is you are actually selling.
Here is one really simple method of increasing the value of your plant and equipment, and every business owner can implement this today.
"A business broker is in touch with the market, and we know exactly what excites buyers"
Watch our previous video WHY ARE YOU SELLING PART 1 GOODWILL here:
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Last week, we talked about goodwill, and what does it really mean in the context of a business sale. This week, we are going to talk about something a little less subjective, and it can still form a really large portion of the assets you are selling, plant and equipment.
We want to give you a simple method of increasing the perceived value of the plant and equipment. 6 out of 10 business owners don’t have one of these, and it is something that every business owner can implement today.
The biggest mistake business owners make when they are setting the sale price of their business, is over estimating what their plant and equipment is worth. And why wouldn’t they, think about it – they know what they first paid, so to a business owner it’s going to naturally be worth more. In many circumstances, the business owner has actually paid more for the plant and equipment, than the annual profit return of the business, so you can see that it’s going to be really important for them to get the best price possible.
The thing about plant and equipment, is that in a business sale, it is included in the sale price, because it is necessary to maintain the current conduct of the business. What this means is that the plant and equipment is essential to the business generating the revenue and profit that it currently generates.
The plant and equipment forms a really large part of the overall perception that a buyer will have and one of the questions they will be asking when they go to assess your business is will there be any further capital expenditure needed to replace or maintain the plant and equipment?
If the plant and equipment appears to be in poor condition, this can be detrimental to how the buyer perceives the value of the business. And this leads us to a really simple method of increasing it’s perceivable and therefore overall material value of your business,
It doesn’t matter what type of business you run, you can implement this today, and it’s also a great best practice to follow as a business owner.
Keep a regular cleaning and maintenance schedule. Think of these as the log books to your plant and equipment. Just like a second hand car, it will have a much better chance of selling if there are log books and they are up to date.
Such a small thing, can make such a large difference to how a buyer will interpret your business, it can give them that extra bit of confidence that tips them over the edge into feeling comfortable enough to make a serious offer.
Next week we are going to talk about the last major asset, intellectual property, and what does it really mean in the context of a business sale.
Please share this video with anyone that you know is a business owner. From all of us at Vision, thanks for watching and we look forward to working with you. Bye.