Utilizing Your Assets
You own a business and have been working harder than anyone else you know. You have accumulated tangible assets such as vehicles, equipment, and real estate. You also have built intangible assets such as trademarks, copyrights, and patents among others.
Selling assets to raise cash may not be the best way to get yourself out of a financial hole. But sometimes, you may just have to sell to improve your cash flow. Or you may even decide to sell the business altogether. Whatever the reason, selling assets you do not need puts cash in your pocket. Here are a few things you should know:
Selling Assets Affects the Value of Your Business
Whenever you sell an asset, the value of your company changes. How so? To replace the asset, you need to raise more money than you received from the sale transaction.
If you must sell, start with government-issued debt securities. Why? You may make a profit, and you will not have people concluding you are liquidating the business. If you still need cash, proceed to inventory, business equipment and finally real estate. Starting with the most liquid assets allows you to continue holding permanent assets as you raise funds.
It is Possible to Sell Property Fast to Raise Cash
In some terrible situations, you may have to sell your property fast for cash. A quick property sale is possible if you are dealing with a buying company that has money.
Some "cash buying" companies need to raise money from mortgage lenders and investors. You may want to avoid them if your need is pressing. Choose well-funded companies such as Quickmovenow that can buy your asset in its current condition for cash.
Sale of Assets Affects Your Taxes
Sale of assets may result in profits. Other times you will sell at a discount. In either case, there will be tax implications. If you sell at a profit, you have capital gains tax to pay. But if you sell below cost, you can claim a business loss. You can deduct the loss amount from the tax payable.
Assets Valuation is Critical
You should carry out marketable asset valuations from time to time. You can hire professionals to do it. The appraisal helps you to know the real worth of your company. Additionally, you get to know how much money you can raise to address future needs. Some assets such as automobiles and equipment depreciate every year. Others like debt securities may increase in value.
License Intellectual Property Instead of Selling it
If you need to raise a huge amount of cash, you may decide to sell intellectual property. You can convert your patents, copyrights, software, and trademarks to cash. But selling such intangible assets may mean you will lose them altogether.
A better idea would be to license intangible assets. The brilliance of it is that you retain ownership while receiving revenue from those who use the assets.
Instead of Selling Assets, Use them as Collateral
Selling may not always be the smartest idea. Sometimes it is better to borrow on your marketable assets. Marketable assets have an ascertainable dollar value, and this gives some comfort to lenders. Before you choose this path, get a firm grasp of your cash flow. Consider your business' projected cash flow — will it allow you to service the debt without problems?
A miscalculation can lead to repossession and auction of the assets offered as collateral. Such eventuality may leave you at a worse financial position than was the case before borrowing. Additionally, it will adversely affect your credit score. You know what a ruined credit score can do to your future borrowing plans. Consider borrowing as an option if you are confident about future cash flow.
Selling assets is a natural occurrence in the world of business and entrepreneurship. A clear understanding of what the sale process entails can help you avoid a lot of trouble. Making the right decisions may improve your business cash flow and strengthen your financial position. Wrong choices can lead to loss of valuable assets and even business collapse. Sometimes the process may involve complex transactions which may require you to find help. You may want to hire competent professionals who can properly advise you every step of the way.
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I have over 20 years of experience directing sales & marketing businesses from startup to their eventual acquisition. I then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. I now am semi-retired and write short books in my free time to share...