I actually didn’t make this mistake. We’re only remodeling two but I thought of it because the third one is downstairs in the cold part of the house, poor me [sniff].
Anyway, this thought is relevant here because of why we’re remodeling. We’re getting ready to sell the house. So now we’ll have two bath rooms with a nice modern look instead of that “what were they thinking?” wallpaper that I’ve lived with for eight years!
The point is, why didn’t we do this seven years ago? Then we could have enjoyed them all this time and still have the house in shape to sell.
My friend, John Hyde is in the business of “work outs” – making closely held companies look good for suitors. Either they’re growing so fast they need alternative financing, or they’re selling, or something like that. It usually involves cutting some expenses and rejiggering three years of financials. Nothing illegal mind you, but making them more accurately reflect what it really costs to run the place. The goal is to show as much profit or cash flow as possible because that results in a multiple for a sales price, or lower financing costs.
He told me that if people would hire him at the start of those three years instead of the end, two things would happen. One is his fee would be smaller, and the other is there would be more profit or cash flow for all that time. In other words, the owners would get to enjoy that remodeled bathroom all that time.
Takeaways:
- What costs would you cut or other improvements would you make if you were putting your company on the market next week?
- Which of those changes should you make anyway?
