Tip #80: Your Business Financial Statements are Like a Report Card for Your Business

your business financial statements are like a report card for your business Think back to when you were a kid. You always wanted to bring home a report card of straight As. And you always did, right?

While, in the literal sense, you no longer have to worry about showing your mom a semester’s worth of gold stars, you have something comparable—your business financials.

These pieces of paperwork act as a snapshot of what’s going on within your business, and they can also be a guide for when buyers want to dig deeper.

Your Business Report Card: The 3 Most Important Financial Documents

Potential buyers will request to see many things before they buy, but they’ll be most interested in the 3 items listed below.

Expect the watchful eyes of accountants, advisors, and buyers to pour over every detail of your financial statements! It’s important that their accurate, up-to-date, and readily accessible.

The most important documents to have ready to go are 3-5 years’ worth of:

  1. Profit and Loss Statements: Sometimes called a P&L, this is a record that shows the revenue and expenses your business incurs over time. This lets buyers know how your business transforms revenues into profits, and helps to gauge the rhythm of earnings and expenses.
  2. Balance Sheets: This is a sheet that summarizes your capital, liabilities, and assets. It should paint a picture of the balance of your income and expenditure over the past year.
  3. Tax Returns: It’s a good idea to find an accountant you trust to help you with these, especially if you’re a new business owner.

The Best Way to Ensure Success is to Work with a Business Broker

If selling a business sounds like a lot of work, that’s because it is! The best way to alleviate some of that stress is to work with a business broker. The Bridlebrook Group will help guide you every step of the way to ensure your business sells for a good price. To get started, contact us online or call 610.325.7066.