Thinking of Selling Your Motel Here,s How to Know it,s the Right Time - VR Business Sales Blog

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Thursday, May 23, 2019

Thinking of Selling Your Motel? Here's How to Know it's the Right Time

Are you a motel owner who’s planning to sell your business soon and capitalize on your previous efforts? Planning is of the essence; by clearly anticipating all obstacles, you’ll be able to work through them effectively.

If you’ve been running a motel for a while, you’re probably no stranger to this logic of anticipating problems and finding solutions in advance. In fact, that is probably the reason why you’re reading this article right now. Luckily, you’ll find the gist of what you need to do outlined in the sections below.

Here are the key steps to sell your motel for the maximum profit:

Prepare for the Sale in Advance

The last thing you want to do when it comes to selling a motel is to be in a position where you have to rush ahead and find a buyer fast. That would be a recipe for disaster, and it would likely pave the way for financial ruin with a side dish of heartbreak and frustration.

If you suddenly had to sell your business, you’d be in the worst possible position to negotiate; you’d have to rush through the property getting everything fixed, you’d have no time to create a marketing plan, you’d probably have to settle for whatever offer happens to come through.

To make sure you stay in a position of power through the sale, you should start planning the sale of your motel from the day you buy it. This won’t always be possible, but at least 3 to 5 years will be needed to make all the arrangements that will be needed to maximize the market value.

Keep your property in pristine condition

When you bring in a potential buyer, the first thing they’ll scrutinize is the state of your motel, starting with the building itself and down to the smallest fixture. This could include the state of your bedding sets and even that broken little retro lamp shade in the back office that you never even use.

They will be looking for weak links they can use as excuses to leverage the deal in their favor. Therefore, it’s very important that you look at your property just as critically as a potential buyer surely will before you go to the market.

If you want to cut a reasonable deal when selling your motel, there can be no burnt out lamps, no broken light switches, no stains in the walls, no funny smells, no worn out carpets, no signs of dust anywhere.

This means you have to adopt effective property maintenance from day one because if you only think of these matters when you want to sell, last-minute maintenance will get messy, expensive and stressful. Keep your motel in pristine condition and your clients will be pleased, operations will be smoother, and the sale process (when it comes to that) will be much simpler.

Make the purchase appealing and easy

If a potential buyer is satisfied with the preservation state and upkeep routine of your motel, their next priority will be checking for financial obstacles of any kind. They will want to make sure all company procedures and standardized documents are in order.

All leases and sales contracts required to keep the operations going that are easily transferable will need to be checked. A buyer will want to check your financial statements for the recent years, and they will likely want to make sure there are no ulterior motives behind the sale – anything from liabilities to outstanding litigations.

By making sure this information is available, in order and clear enough, your business will seem more valuable and you’ll be in the right position to secure a good deal.

It’s also a good idea to make sure your key employees have good employing agreements that make them confident their position will not be affected by the sale. This will be good for them and it will be good for the buyer (since they will get a skilled and trained workforce as part of the sale).

It will also be good for you - having all operational gears running smoothly adds value to any business and makes your life easier, even before you think of selling.

In the same logic, you want to prune out underperforming employees that don’t add value to your business, since having deadweights on board will not help convey the right image.

Maximize your free cash flow

Just before you put out your “for sale” ads, you should take action to maximize your free cash flow and ensure financial control, in preparation for the dealings ahead. This may include scaling down the inventory, collecting any outstanding debts, renegotiate supply contracts, and combing through your income statements aiming to reduce personal adjustments.

At this time, you may have to adjust the style of your accounting towards maximizing the value of your business rather than minimizing your tax liabilities – it’s worth having a serious conversation with your accounting on this matter.

By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.

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