I know a thing or two about selling businesses. I’ve done it both hard way, and the easy way, and it’s not hard to figure out which way I prefer. Even if you plan on turning your company into a legacy that your children will run after you’re gone, the best time to get your business ready to sell is today! Before you ever want or need to sell your business – that’s when you should start. Here’s what you need to do:
- Identify strategic buyers. Strategic buyers are those who want your business for some reason other than just your company’s revenue. They may want your customers, your intellectual property, or even your employees. If you can identify these buyers, you can learn which of your assets are most desirable – and you can protect them.
- Resolve any legal troubles. Buyers won’t want to touch a business that has lawsuits or liens against it, so you need to clear up any old business and get your company in the clear.
- Focus on profitability, rather than debt. Businesses are often valued by a multiple of their profit, so you’re better off directing extra revenue toward measures that make you more profitable. Paying down debt with your extra money doesn’t add nearly as much to your value.
- Protect your key employees’ positions. We all have those staff members who are critical to our survival, and it’s smart to make a plan for what you’d do if one of them left. Whether your discreetly cross-train employees or keep a list of potential new hires, you want to make sure that if one of your key employees leaves, that your business goes on as usual.
- Get out of the office. Not only is your business more valuable if it can run in your absence, but you also need to be out in the marketplace as the face of your company. You need to continue running your business as if you’re going to hand it down to your children, and that means cementing relationships with important clients and maintaining your market share. Don’t slack off!
- Cut costs. You’ll boost your selling price if your company is lean, efficient, and profitable. Make sure you trim unnecessary expenses and eliminate anything that doesn’t directly contribute to the health of your company.
- Work with a business broker or investment banker. You’ll want to make sure your business is ready to sell when you tackle this step, but you’ll often find that brokers have a stable of businesses looking to acquire others. Not only can you sell your company more quickly, but a broker can also help you get top dollar for it.
- Be hard to get. If you appear to be desperate to sell, your value diminishes. Cultivate a field of buyers and watch your price go up. You want buyers to have competition in order to ensure that you get every penny you’re worth.
- Keep it quiet. The news that you’re looking to sell your company can potentially frighten off employees and even deter new clients from signing on with you. You want your business to continue to grow and flourish … just in case a sale falls through.
The time you spend preparing your business will give you one additional benefit other than just getting you ready to sell, and it’s actually a huge one. Your business will be healthier. Much of the advice I’ve listed here is stuff you should be doing anyway – measures that make your business more efficient and profitable, in addition to making it more attractive to buyers.