When getting ready to sell a house or a car, the first thing people do is clean it up and get rid of the clutter. It is not different when selling a business. The process just has to begin much sooner.

Buyers look at the past three or four years of financial performance, so that is when the cleanup process should begin. Sellers need to look at what the future buyer will be looking for and organize appropriately. It is important to consider the following before deciding to sell:

Are you taking out too much compensation, travel, entertainment or other related expenses? -- This may save you money on income taxes, but buyers have a difficult time differentiating between what is required for business and what is excess. A buyer may agree to pay x-times, so an additional $100,000 of expenses could cost you hundreds of thousands of dollars in sale value. With excess expenses, your bottom line or net income is lower, which makes the profitability and the amount a buyer will pay lower.

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