Check out a “business for sale “ website and it’s easy to understand why buyers may reject a business listing with just a quick glance at the financial summary. Numbers tell a story. What’s not so clear is how to grab buyer attention. What is “Financial Performance” and how does high-quality financial reporting increase your business sale value?
Let’s start by considering the question buyers are trying to answer:
Will your financial performance be delivered in the future?
The answer must be more than optimistic projections. In fact, overly optimistic forecasts are a bad place to start. Future financial performance is built from a solid base of past performance, on a stable organization structure that can deliver growth going forward.
High-quality financial reporting starts with trustworthy performance numbers. Trust is best established with an independent audit of your financial statements from a reputable accounting firm. An independent audit instantly vets the credibility of your financial performance and helps you communicate your past investments.
Build from this base of credibility by explaining your current plans. Plans should address revenue strengths and threats, along with organizational changes needed to deliver growth, and the potential mistakes and triumphs that may occur along the way.
Add realistic projections that should result from the steps taken. Move beyond optimistic marketing forecasts and consider “worst case”, “most probable” and “best case” scenarios. Considering downside provides a comfort factor that the projections are realistic.
Ultimately high-quality financial reporting covers past, present and future views: trustworthy past performance, credible present plans and actions that demonstrate a stable and strategic organization, and future projections that show the potential of your company moving forward.
Whether you are looking to sell, or simply put a value on where you are today, high-quality financial reporting helps you identify and focus on critical steps that are needed to improve and communicate the value of your company.
Don’t know where to start? We are here to help!
Contact us and we’ll step through the process with you. In July we’ll drill into Growth Potential. What steps should you taking to prepare for the sale of your company? Don’t want to wait? Sign up for our e-newsletter and get notified when the Growth Potential blog is posted.
In the meantime, please check out this Value Builder Financial Performance video to learn more about improving the value of your company.