A Word About Your Financials

A little known statistic is that nationally, of all the businesses that go on the market
“only 20% of businesses that go on the market ever sell.” (Muradian’s record is close to 90%!) Most of the businesses that fail to sell have one thing in common; poor financials or an inability to tell a prospect what the business makes for the owner.

1. Poor or no financials 60%
2. Overpriced 20%
3. Undesirable business 10%
4. Reliance on owner 7%
5. Other 3%

A necessary part of putting together a marketing package to sell any business is being able to clearly tell three things to a buyer:

1. How much did the business take in?
2. What were the expenses necessary to operate the business ?
3. How much money did the business’ owner get from owning the business? (The
net profit)

The primary financial document is the Statement of Income and expense, sometimes
referred to as a Profit and Loss statement or simply, P & L. A simplified P & L might
look like this although the expenses for different types of businesses will vary:


ABC Company
Income and Expense Statement
January-December, 2009

Income Notes
Food $120,000
Beverages 27,000
Other 12,000
Total income 139,000 ALL business income

Cost Of goods sold
Food 40,000
Beverage 9,000
Total 49,000
Gross profit 90,000

Expenses (Only business expenses).
NO personal items like
Payroll & payroll tax, employees 15,000 car payments,
home Office expense 200
expenses, etc.)
Owner’s salary & payroll tax 6,000
Utilities 1,000
Insurance 300
Total 22,500
Net Profit $67,500 “The bottom line”

To sell a business having the P & L for the past three years plus the current year-to date is required. Also as each month ends, a new Year- to- date report must be prepared to update the numbers so the listing looks fresh to a buyer.

With a P & L you can answer the question “what does the business make?” , and expect
to get your business sold faster.

B.A.Boss S.L.

Search and you will find

Contributed by Jack Crosby, Muradian Business Brokers, Hot Springs, AR, email

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