How can I make my business easier to sell?
Whether your business is just getting started or you’re nearing retirement age, it’s never too soon to look ahead to the day you might cash out. Here are four ways to get prepared.
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Create a succession plan. Every business owner needs an exit strategy. Many involve transferring the business to an heir, co-owner or key employee. A business succession plan helps streamline this process. It requires identifying the ideal successor(s) and determining how you will complete the transfer far in advance of the actual event. Addressing logistical and financial decisions early makes for smoother transitions later. Take the time to network with other business owners to get a feel for how they are planning.
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Polish strengths and repair weaknesses. If you’re lacking a logical successor, you will likely need to look outside for potential buyers. To increase your business’ appeal, focus on things that interest potential buyers: differentiated products or services, strong branding, a lean business structure, orderly financial records and a growing customer base. These should always be top-of-mind, but are especially important as you consider a sale.
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Plan ahead. To command the best price, business brokers recommend taking at least two years to strengthen your financials and prepare your business for sale. Don’t wait until revenues are dropping, forcing you to conduct a fire sale. This is when your customer behavior and business analytics tools will assist in determining the right time to sell.
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Know your worth. Setting an unrealistically high price tag on a business discourages buyers, while underpricing may suggest you are burned out, short on time or took bad advice. Do your homework and collaborate with experts when setting your sales price, aiming for one that attracts serious prospects who might expand upon your vision. Visit with your banker regarding tips to better understand your worth. Bankers are not only good resources as you run your business, but also when you are planning on retirement.
The bottom line: Advanced planning can make your small business easier to sell. You can’t predict when that time might come, so it’s smart to start preparing now.
Also See:
- 50% of Small Businesses Do Not Have a Marketing Plan
- Defining career paths for your employees — and why they matter
