Manufacturing Today - Spring 2011 - (Page 14)

COLUMN BY PATRICK MCNALLY Whether you sell or keep your business, the things you do to prepare your business for sale can increase its value, make it more secure and increase its cash flow. Know Your Company’s Value You need to know the value of your company so that you can determine if you will get enough through a sale to meet your needs. Understanding what drives the value of your business will also help you to identify areas for improvement. What makes your company unique? Why do customers return? What gives you an edge? Does your company provide world-class service? Do you own proprietary technology or intellectual property? M F G TOMORROW B USINESS VALUE S U STA I N A B I L I T Y C ONTENTS D IALOGUE Is Your Company Ready? Look at your company through a buyer’s eyes. Examine every aspect of your business to be certain it’s ready for sale. For example, your company’s sales are up 18 percent to 20 percent for two years in a row – but the bottom line is flat. If you sell your company under these circumstances, you won’t receive compensation for the increase in sales and might even get a lower price. A buyer might think your company is making low margin sales to increase revenues, thereby diluting its profit margins. Or, a buyer may wonder what’s wrong with the business, or whether costs are rising out of control. You will be able to get more for your business if you take the time to identify the problems and fix them. To determine if your company is ready for sale, ask yourself the following questions: Is my financial and operational reporting reliable and timely? Reliable financial and operational reporting will give you the information you need to identify areas for improvement. If you don’t get reliable management reports in a timely manner, it will be more difficult to increase the value of your business. The Time is Now planning for life after business ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Whether you’re considering selling today, in five or in 10 years, the time to plan is now. Some things must be done at least 10 years before a sale to minimize taxes. Furthermore, buyers will be skeptical of profitability improvements implemented shortly before sale and might even view them as short-term fixes that could damage the value of the business. M F G TO N EWS A CCOUN C ONTEN D IALOGU P RODUC B USINES I MPROV 14 SPRING 2011 N EWS S U STA I N

Table of Contents for the Digital Edition of Manufacturing Today - Spring 2011

Manufacturing Today - Spring 2011
Business Value
Supply Chain
Patriot Forge Co.
Reading Bakery Systems
The South African Mint Co.
GCX Corp.
Jay Industries Inc.
Johnson Electric Coil Co.
Certified Transmission
Olhausen Billiards
Pace Industrues
RTI Claro
The Testor Corp.
Restonic Matresses
Advanced Automation
Anadigics Inc.
Hermes Cones & Snack Manufacturers
JR Automation Technologies LLC
Prodomax Automation Inc.
Stafford Manufacturing Corp.
New England Ropes
Berger Paints Trinidad Ltd.
Air Tractor
Artisans Inc.
Bermingham Foundation Solutions
Bowers Manufacturing Co.
Ferti Technologies
Industrial Acoustics
Morton Industries
Presstek Inc.
Ranco Fertiservice Inc.
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Manufacturing Today - Spring 2011