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Q We have a smaller boutique and are looking for a potential new owner. Do we sell our business with the current inventory or close it out?
A The price an owner realizes for his business is, like most items for sale, a matter of supply and demand. So when preparing a business for sale, the key question any seller should focus on is: How do I maximize the demand for my business? In that sense, preparing a business for sale is no different than preparing a house for sale. What do you do to get your house ready to sell? Spruce up the landscaping, trim the bushes, touch up the paint and clean the windows, all in an effort to make the house as appealing to as many potential buyers (the demand) as possible.
In preparing a business for sale, some things are very similar -- cleaning and sprucing up the facilities, signs and displays -- while others involve sprucing up the business side of things. Inventory is one of a number of issues to consider on the business side.
Disposition of the inventory will be determined during negotiations leading up to the sale. Different buyers may want the entire inventory, some of it or none. The key in preparing the business for sale is not to eliminate any of those potential buyers.
In preparing for the sale, you should have attractive, salable inventory on hand. You want your business to look thriving, with great prospects, not like an empty shell. Recognizing the possibility that you may need to dispose of some inventory after the sale, you want to keep the shelves stocked and attractive, but you don't want to be overstocked and you probably want to move out-of-fashion or slow moving items. So I would not recommend a close-out sale, but I would recommend that slow-moving or dated items be priced to move and the inventory pared to attractive, clearly salable items.
Answers are provided by the John M. Morrison Center for Entrepreneur-ship at the University of St. Thomas. E-mail questions to consultant@ startribune.com.