For many small businesses, selling their business down the road is a longterm strategic goal. However, if you are not prepared, the process can come on suddenly. In order to ensure that you are on track, there are many areas of focus that need to be tended to as you prepare for a sale.
Begin with taking a deeper look into what exactly the business you have IS at its core. What is its unique value proposition in the marketplace? How does your business add, and drive, value? This is crucial to consider as it will spark the attention of potential buyers who might be looking to expand vertically in the market or add capabilities to help gain additional share in a market already being served.
While on Business Growth Cafe, Wayne Pinnell, CPA and Managing Partner of Haskell & White, explained that, as you are developing products and services, a focus on generating profits is crucial. Investors aren’t simply concerned about your track record and where your business has been in the past; they are concerned with your business’s outlook and trajectory for the future. Ultimately, investors are looking at the return on investment that your business promises to provide moving forward.
Process is also a key component of making your business marketable when looking to sell. Processes vary for every business, but ultimately it is about how you get your product to market distribution channels, sales, franchising, etc. While the specific components may vary, it is all about figuring out what elements of your process are primary value drivers, and ensuring that the system is intact and transferrable. How is your company governed? Your practices, including, the organization and management elements of your firm, are also key in ensuring that your business is ready to be sold when the time comes. This includes everything from your internal structure, your system of running the company, all the way to your organizational culture, which, while an intangible, adds to your company value. Every aspect of how you run your business is important to the potential sale.
Think about it this way: how would your business run if you were to retire or walk away tomorrow? Would it fall apart, or is it built on a solid structure that can stand on its own with new leadership? If you’re not comfortable with the answers you give yourself, then you have some work to do.
As you plan for and prepare to sell your business, ask yourself this question at all stages. Ensure that the foundation of your business is built on solid rock to help preserve the business you built will thrive and survive beyond your leadership.
For more insight on this topic and much more, listen to my recent interview with Wayne Pinnell of Haskell & White, LLP, on my radio show, Business Growth Cafe here: