Over the past weeks, I did a lot of work in freelance marketing (Yes, it's a new area I've begun freelancing on). Someone I just met, told me to help sell his business and was willing to give me a 10% commission. I have never sold a business before but if memories serve me right over the past years of studying financial management from college, plus the many months on website flipping, it all boils down to selling business assets.

So I told him to give me an itemize structure of his business. All his assets should be accounted for. Problem with him was that he didn't do any accounting or kept any bookkeeping around. So I did the whole thing with him.

Item after item, I was impressed with how well he can actually manage the business alive over the last couple of years of his business takeover (apparently, its original owner started the business 20 years ago and sold it to him). We have already accounted all the tables, chairs, computers, fax machine, printer, photocopying machine, etc and put it up to how much are they valued (some of them are his and mine's wild guesses so it was really proper accounting).

One thing he loves to mention was that he renovated the place which costs him thousands. Surprised to my thought that renovation does not come under assets unless I asked him this question, "Do you own the place?". Since the business is at a commercial building, he might be the landlord. Or so I assumed. "No, I don't own the place, I still have to pay rent.", he answered. That was a shock. I then asked him, "Do you think buyers should or would buy the place inclusive with the renovation cost?". Immediately he answered, "Yes." And further explained with an example and question, "If you were to start up a business and begin renting out an empty shop lot, what is the first thing you do?". Immediately convinced but then later thought and said, "That's not your responsibility to renovate a property owned by someone else. Unless you paid for it and get a discount on the rent, then its worth it. Because you're fixing up the place on behalf of the owner. And also, if you were to move from one area to the other, you can't bring all the tiles, ceiling and walls with you. And even that, you can't sell a place where you cannot and do not own." He then says, "Renovation is an asset. A Fixed Asset. And such, it should bring value to the account." He kinda got me on his stubbornness, and decided to let this slide into the account and see what responses I get from interested buyers.

After a few marketing methods over the past 2 weeks, I managed to get one buyer whose interested in a business takeover. She wanted to see everything, from its location to its ledgers. And so I did with all my confidence inside my sales pitch. In the end, she was also surprised that renovation cost does not matter if you do not own the place and should not be taken into account. I agreed and told her that if you're still interested, I'll try and negotiate with him regarding the "Assets" matter.

Lesson to be learned (as for me, it was revision.): Assets is only defined if it is money going into your account and not out or does nothing to the cash-flow. To the point, Assets mean more income or increase positive cashflow.

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