Ready to Sell: Smart Steps to Boost Your Business Value

I've helped dozens of business owners prepare for successful exits, and I've learned that the highest valuations go to businesses that look ready to run without their current owner. Buyers want to see clean books, predictable operations, and profits they can verify. Smart, focused improvements made now will pay dividends when you're negotiating your sale price.

Here are the specific actions that will have the biggest impact on your business value in the shortest time:

Review your financial documentation

Reconcile every account monthly. Close open loops between your accounting system and your tax return. Confirm that revenue, COGS, operating expenses, assets, and liabilities are categorized the same way across the P&L, balance sheet, and return.

A common mistake we often see is equipment leases/payments missing from the P&L, only to be accounted for on the tax return. If a $2,500 monthly lease is absent from the P&L, profit is overstated by $30,000 for the year. That creates surprises in diligence and weakens negotiating power. Capture all recurring obligations on the P&L, and list every liability on the balance sheet.

If you operate multiple locations, be ready to show financials specific to each operation.

Review pricing and product/service mix

Review pricing, discounts, and product or service mix. Identify low margin items or services and either reprice, bundle, or retire them. A two point gross margin improvement often produces more value than higher revenue with lower margins. Buyers pay for durable earnings. Show that you are managing margin with intention.

Evaluate new hires carefully

New full-time hires increase fixed costs and can lower trailing earnings if the role will not produce clear, near-term returns. Replacements for critical roles make sense. Additions should pass a simple test: Can this work be handled by cross-training, a defined process, or a temporary or fractional resource for the next six months? If you do hire, write the job description, KPIs, and handoff plan now so the role is transferable to a buyer.

Treat inventory like cash

Align purchasing to realistic demand and lead times. Clear slow movers and dead stock, even at a discount, to convert inventory back into cash. Be cautious with year-end bulk buys to reduce taxes. If you plan to sell, you may be handing the buyer excess inventory that is not valued dollar for dollar. It also ties up cash and can mask the true working capital needs of the business.

Be careful with large equipment purchases

Big purchases can lower taxes but reduce cash and rarely lift valuation in the short window before a sale. If the work requires equipment, consider renting or short-term financing. For example, buying a $100,000 machine to save taxes might seem like a good move, but you may not capture that value in price negotiations 6-12 months later. Be selective and have a clear investment case for any capital spend.

Establish clear operational documentation

Write simple standard operating procedures for the 5 to 10 tasks that drive revenue, quality, and cash flow. Focus on your most critical processes: customer onboarding, quality control, billing and collections, inventory management, and key production or service delivery steps. Start with simple one-page workflows that document the steps, who does what, and what happens when something goes wrong.

Create a master reference list that includes vendor contacts, contract renewal dates, pricing terms, software licenses, passwords, equipment settings, and supplier lead times. Store everything in a shared, organized system that your team can access.

Identify your single points of failure, tasks that only one person knows how to do. Cross-train employees for these critical functions so no single person holds business-critical knowledge. Buyers prefer companies that run on documented processes rather than personal memory.

Tidy up add-backs and owner items

Separate personal or one-time expenses now, rather than waiting for diligence. Label them consistently and be prepared to support each item. Clarity here speeds diligence and strengthens the case for adjusted earnings.

Demonstrate consistent operational performance

Create a one-page monthly dashboard that tracks revenue, gross margin, on-time delivery, backlog, customer churn, and cash conversion. Consistent reporting for the next six to twelve months helps a buyer trust the numbers. A simple 12-month forecast that ties to your trailing results is even better.

Legal and compliance updates

Make sure licenses are current, contracts are signed and organized, customer consents are on file, and any liens are known and documented. Clean files reduce friction and keep deals on schedule.

The bottom line

Getting these items right signals a well-run company. It also reduces surprises, shortens diligence, and supports a stronger multiple. The businesses that command premium valuations are those that look ready to transfer smoothly to new ownership.

If you are considering a sale in the next 6 to 12 months and want a brief, confidential assessment of where to focus first, reply to this email or call Sacramento Business Brokers at (916) 934-2269 to schedule a consultation.