How to Prepare for the Sale of Your Business
At this moment, it might be hard to wrap your head around the idea of selling your business. It’s taken so much time, effort and energy to get it off the ground and to the point where it is today that the idea of selling it might seem rather strange.
The truth is, though, looking at it like this is not only denying the truth that someday you may need to walk away, but it’s also causing you to miss out on a great opportunity to make your business even better.
There are lots of reasons why you may want to sell your business: perhaps you are choosing to retire, you’ve got another project lined up you’d like to spend more time on or something has come up in your life that takes you away from the business. No matter what it is, it may happen someday, and taking steps now to make your business more valuable will only make things easier in the future.
Plus, there’s a saying that “a business worth selling is a business worth owning.” Making your business more attractive to potential buyers means implanting some best practices into the day-to-day operation of your business, and this can only mean good things for both now and the future.
Here are some things you can be doing now to plan for the sale of your business sometime in the future:
Consider moving some functions outside the businesses
As a local, service-based business, you operate in a very specific market. Part of what makes you successful is your connection with the area in which you work. You know what will do well and what won’t. For now, this is great, but when you go to make a sale, this might actually work against you.
When someone looks at buying a business, they want to know how likely it will be for them to replicate what you have already done. If all of your processes and practices are top-level confidential, and only work because you know how to do them, investors are probably going to steer clear.
One way to make your business more accessible to investors while also improving it now is to consider looking for some outside help. Perhaps you can hire an outside social media marketing agency to help you, or outsource some of your customer service functions. Investors will look at this and consider it more likely they will be able to continue your success, since they will have more people from whom they can learn.
Work to establish a strong company culture
The success of your business will ultimately depend on the team that you construct around you. And the key to building a good team is having a strong culture. When you have this, it’s easier to find employees that will fit in, and employees tend to be more productive, as they are deeply engaged with the work being done.
Culture develops on its own, but you can have a role in shaping it. Decide what it is that makes you successful, and work to build these characteristics into everything that you do. If you are an environmentally-conscious company, make sure this defines you. If you’re all about customer satisfaction, this needs to be present from top to bottom.
Investors will be able to see when there is a strong company culture, and they will be more likely to make offers when they do. This is because they can expect things to stay the same after they take over; it will be easier for them to maintain continuity and to bring in more people to help the business continue to grow. Strong culture is also a great way to make your business better while you are still the owner. So, again, it’s a win-win.
Identify and address any risks
Running a successful business is obviously much easier when times are good. But good times don’t last forever, and your ability to weather the storm will define how long you are able to remain in business.
While you can never predict the future, you can be honest about your vulnerabilities, whether internal or external, and have a plan for how to address them. Investors don’t want to take over businesses that have no idea what’s going to happen to them down the road, and you don’t want to run a business like that either.
Take some time to identify where you are at risk and come up with some concrete strategies for mitigating this risk. It’ll help you whether you decide to sell the business or not.
Make sure your records are in tip-top shape
Accurate record keeping is essential for any business. It helps you understand your cash flow situation so that you can make sound decisions about where to take the business moving forward, and it also makes sure that you are complying with all the necessary tax laws and relevant regulations.
Too many small businesses don’t do a good enough job of this, and this is often the reason they fail. Don’t become another statistic.
But records become even more important (if that’s possible) when you decide to sell the business, as investors will want to see them so that they can determine how much they want to offer you. Inaccurate records could result in offers way below what the business is actually worth. Take some time now to shore up your documentation to set yourself up for both current and future success.
Final thoughts
The moment to sell your business will present itself on its own. Something will happen that will tell you the time has come, so don’t force it. However, know that the moment will come someday and be ready for it. Consider implementing some of these strategies into how you run your business now so that when it does come time to sell you can enjoy offers that accurately reflect how hard you’ve worked to make your business a success.
About the author: Jock is an internet entrepreneur who helps others buy and sell their businesses. So many of his clients come to him saying, “I wasn’t planning on selling just yet, but…” As a result, he always advocates that people begin planning for the end now. It makes good business sense, and it also makes for a more rewarding payday when it does come time to sell. Originally from Australia, Jock now makes his home in the United States. You can find some of his work featured on CNBC, Entrepreneur, Forbes and Business Insider.