What if you found out that tomorrow you have to sell the flight school? While trying to build your school, even if you have no plans to sell it, look at it through the eyes of a possible buyer and ask yourself what things you’d have to do to make it more marketable, and why you wouldn’t be operating it in this manner every day starting today.
Just like selling a house, you probably need to spend some time, money, and maybe even a bit of elbow grease to make improvements that appeal to buyers. Since there are usually very specific things to pay special attention to that will make the most impact on the price you get more than others, keep these at the top of your list of priorities:
- Tie-up loose ends—Take care of leases due to expire, unsettled claims, rude or untrained employees, or key employees who may be leaving. Dealing with such details as soon as practical will ease the stress of an unsure future and ensure stability in the daily operations.
- Assets—Keep those assets that help run the operation and will remain with the business in good repair. Operate smoothly and consistently, comply with all safety regulations and be energy efficient. Nobody wants to live with daily anxiety that the old copier may die tomorrow, or that the entire flight scheduling software system will go down because nobody took the time to keep up with the virus protection scans or data backups.
- Keep good books and records—usually a business with spotless records will not only sell quicker, but it will come closest to getting the asking price. The daily operation of doing so will ensure that you always know your cash flow and expenses. When it comes time to ask your banker for an extension of credit or a supplier to finance new equipment, providing ready documents will show them your attention to detail and solid business management skills.
- Systems, policies, and procedures—by streamlining the operational side of HR, including the implementation of company manuals, policies, and standardized procedures, when the time comes to train a new employee, expand the school, or even branch out into a new location, you’ll have established methods that will ensure consistent performance. A new owner needs to know that when they turn the lock on their first day there will be no question about how things were run in the past that enabled the school to succeed, so that consistency can easily be maintained.
- One size fits all—if no one can fill your shoes and something happens to you, the business will go down the tubes quickly. If you are the business, consider phasing in a name or ‘dba’ that makes your school less you and more a flight school that can hold its own identity. Else the income will simply be forfeited when you aren’t able to sell Big Bob’s Flight School to someone named Molly.
- Unreported income—if you remove cash and don't report it to the IRS, there will be a problem if you intend on selling the business, since you’ll either have to prove the figures or devalue the school accordingly. Considering the fact that you’ve hidden it from the IRS, do you really want a complete stranger knowing about it? Say you save yourself roughly $30,000 over the course of five years by doing this little trick. Since your business will sell at two to three times the average of your total sales over a five year term, was it worth losing possibly $60,000 more from the sale price?
In an effort to improve the way your school operates now, overcome complacency by fixing these deficiencies and you’ll see your business and employee morale improve immediately. Remember, the secret to make it easier to sell your business is to make it easier for someone to buy it.