Cutting the wrong expenses is going to lower the sale price of your business. That's right, if you're selling your business and you want to get the maximum amount you can, you can't cut these three expenses. Number one, marketing.

If you cut your marketing expense when you're getting ready to sell your business, three things are going to happen and they're all bad. Number one is the lead generation flow. The lead flow for your business is going to slow down and it's slowing down right at the time when a buyer is potentially doing due diligence.

You don't want low lead velocity, you want maximum lead velocity when you're going to sell your business because people want to be excited about what they're buying and they're excited if there's demand for what they're buying. Number two, related to cutting marketing, is it's an absolute disaster because it shows that you're not committed. Even though you're selling the business, you're not committed.

And number three, if you're cutting your marketing expense, that's demonstrating to the prospective buyer that you don't believe in the business anymore and maybe that's the reason you're selling. The second thing you should never cut when you're selling your business is expenses on skilled employees. In fact, you should invest more in your skilled employees because you want them to stay with the business after the business is sold.

Spend more on talent, not less on talent when you're selling your business. For a year or longer before you plan to sell, spend more on your talent. Number three, maintenance.

You've got equipment that's critical to you delivering your product. You got to invest more in your maintenance. You got to spend all the money you need to on preventive maintenance.

Clean that equipment up, make it look as good as possible. People buy with their eyes, they buy with their ears, they buy with their nose before they ever buy with their wallet. These three things should never be cut in any business.

Do this and you'll kill yourself. Don't do it and you'll be better off. Let's dive deep into each of these three things and let's talk about what you should do if you're planning to sell your business in each of these three areas.

So first and foremost, marketing and sales. If you're planning on selling your business, you need to have a marketing lead generation system that provides you with customers who are ready, willing, and able to buy your products or your services. Marketing is all about driving traffic to the people who can identify the problems that your customers have and then match your solutions with their problems.

So if you're looking to sell your business, buyers buy future profit. That's what a buyer of your business is looking for. So what is the engine of this profit? It's leads coming in and then sales people converting those leads.

You need to actually increase the amount of marketing you're doing if you're going to sell your business because more traffic coming into the business, qualified traffic, people who have a problem you can solve, the ability to make a decision, and the money to afford your services, and the desire to solve this problem now. Those four things, people who have those four things coming into your business and asking for help is a very, very good thing. You also want to make sure you have the right people closing this business as the leads come in.

Now you're thinking to yourself, Dave, if I had good traffic and I had good people closing and my sales were going up, why would I want to sell the business? And this is the thing. Marketing and sales are the engine that keeps your business going and only businesses that are continuing to grow or have the potential to continue to grow, those are the only businesses that sell for any real value. If you want to sell your business, it has to be a profitable business that is growing or that has the potential to grow for whatever reason under someone else and not under you.

And I can't stress this enough, that second point, it's garbage. If your business isn't growing, you're not going to get the value you want. So double your marketing spend, have the best sales people with the best sales training, that's how you're going to demonstrate that your business is valuable and should be sold for a high multiple.

The second thing, skilled employees. You never, ever cut back on the pay you're going to give to your skilled employees. In fact, at least a year in advance, my preference is 18 months or more in advance, you should sit down with your skilled employees and make sure the compensation and the working conditions are exactly what they want.

Now you're never going to tip your skilled employees off that you're selling the business. You don't want them to know this until the deal is signed. You never, ever, ever once, unless you're selling it to them, you never want them to know that you're selling the business in advance.

But what you should be doing a year and a half, two years, three years in advance is having a great package in place with the best possible compensation. Compensation that is probably 10% more than what your competition pays so that your employees feel great about the company and your employees want to contribute to the success of the company. If a year and a half, two, three years in advance, you take care of these skilled employees, you're going to want to continue to take care of them.

Cutting the salaries of people who are great in your company is a disaster because they're going to leave and they're going to be disgruntled if they stay and that's not going to be good for the sale of a business. It's going to signal to a buyer that this business is a sinking ship. The final point is maintenance and this should be common sense, but I find most business owners don't get this.

I'm going to sell the business in a year, I'm going to forgo the $10,000 preventive maintenance on my heavy duty piece of equipment. That's garbage. Buyers during the due diligence process are going to want to see your maintenance schedules on all your equipment.

They're going to want to know if the equipment is toward the end of its useful life because they're going to factor in replacement or repair costs into the purchase price. So if you're in manufacturing, your preventive maintenance schedules are either going to add value to your business or they're going to take value away from your business. So if you're going to sell your business, you don't ever, ever cut the money you're spending on preventive maintenance on your equipment.

The reason is because people want to see those preventive maintenance schedules to know that you've taken good care of your machinery, of your equipment, and that the equipment has more useful life left. They'll discount the value of your business if you haven't been taking good care of your equipment. So when it comes to selling your business, do not cut your expenses in sales and marketing.

You should increase your expenses in sales and marketing. When it comes to selling your business, do not cut the money you're paying to your key employees, to your skilled employees. You should have a package in place that makes you an employer of preference in your industry, in your local geographic market, and do not cut your expenses when it comes to maintenance on your equipment or on your property or your physical plant.

Anything that you're selling to the buyer should have maintenance schedules, should have all the records. And this is so important that I'm going to stress it again. If you're selling real estate as part of the package, you're going to want to show when you replaced the roof.

If you have a building that has an elevator, when was the last time you replaced the elevator? What was the last foundation or structural inspection you had on the building? If the real estate is coming with it, all of those things factor into the price that you get for your business. All of those things should never ever be cut. These are the three expenses you should never cut when you're selling your business.

My name is Dave Lorenzo. We are back tomorrow with another edition of our show. In the next episode, we are going to talk about the hidden assets that buyers will pay more for and how you can surface them before you sell.

You're not going to want to miss tomorrow's episode. Be sure and join us for that. I'll see you back here again tomorrow.