We talk a lot about making sure a motel’s presentation is up to standard before taking a business or property to the market for sale. The first thing we think of when talking about presentation is the physical aspect and look of the property. But what about the financial presentation of the business?
Supporting financial data to confirm what the Seller is saying about the business and how it performs is just as important as the physical standard of the property. An issue with either will turn a buyer’s focus away from wanting to pursue the business and onto others that are looking more attractive. How financial data presents can be covered a couple of different ways.
Aside from the Profit and Loss Statements being required by a potential buyer, other financial data such as monthly income and occupancy figures will be required for cash flow purposes. Council rate notices, electricity, laundry, rent (in the case of leases) and Insurance Invoices and Receipts (to name a few) will be required. These must all match what has been included in the Profit and Loss Statements. Providing monthly Income Statistic reports that include GST, will not match the Profit and Loss Statement. As long as the consistency of the difference of the GST is there, the issue can be cleared up quickly however if this is not the case, the interested buyer starts to question the accuracy and legitimacy of the data. If there are anomalies for a particular reason, be upfront and explain why this is the case. Never try to sweep it under the carpet and hope that the issue goes away. That never happens! Make sure all the data you as a Seller are providing matches up.
Buyers who are interested in buying a business want the financial data presented to them to be accurate. When their interested is sparked in a business it is based on the information that has been provided. If any anomalies arise they are probably more disappointed than anyone. Nine times out of ten the financial data presented will be accurate. There may be small differentials here or there but in the main these will not have a material affect on the profitability or value of the business and are easily explained or remedied.
No one buys the smallest of products if they are unsure of its validity and correctness, let alone a business and property. The credibility of the financial data being presented and the person presenting that data is paramount. Lose that credibility and lose the sale.