7 Killer Tips to Build and Sell Your Business
As an entrepreneur, you know business is all about making a plan – and then a Plan B, C, all the way through to Z. Even if you do not intend to part ways with the company you worked so diligently to build, it is smart to leave that option open and available. In this article, we dive into how to build a business that you could sell.
Life changes; careers change; goals change: when you focus on a “build and sell” strategy, you can adapt if you find circumstances warrant the move. With that in mind, how can you create a company that is scalable and saleable?
Build a Business to Sell
Shift your mindset: instead of an in-it-till-the-end business, think about building a business to sell. This, of course, does not mean you have to sell it! But you have the option, which can become a real lifeline in the future. Our tips to build and sell are:
Build a Business Worth Selling
Or, another way to think about it: build a business worth buying. If you were a buyer, what value would this company offer? What opportunities? What is the potential? Where are the customers? And are they “bought-in” enough to stay with the new owners? In any case, they want to purchase a solid business that will benefit their bottom line.
On-target branding and marketing are key – not only to your current success but to your future plans. This is job #1 in many ways. Every element, from your logo and colors to your domain name plays a role. Think about Apple, Nike, UnderArmor, Yeti, Gymshark… They are recognizable and every asset contributes to the recognition and, ultimately, customer loyalty and advocacy.
So, you’re not Nike (nor do you have a Nike-sized budget!). But you are a business with a great product and stellar service: make sure that your brand is consistent and compelling. This sets you up for a profitable now, and you and your buyer up for a profitable tomorrow.
Build a Team
A lesson you learn quickly in business is that you cannot go it alone. This is especially true when you are going to build and sell. You need to start establishing and nurturing, relationships that will help position you for success. For example, you need:
- A CPA with experience in accounting, taxes (which will be a BIG part of your selling experience!), and business sales.
- A business lawyer who is also a CPA. They need to understand the ins and outs of not only finance but the sales process.
- An expert in business valuation. What is your business worth? Not what do you think it’s worth. What is it really worth? The next step is identifying strategies to grow and maintain value over time.
Which experts can help you build a business to sell?
Put Strong Systems In Place
Of particular importance is efficient, effective bookkeeping and accounting systems. When selling, you will need to provide income statements, balance sheets, tax returns, accounts payable and receivable, insurance policies, customer contracts, inventory, and other key documents for the previous three to five years. Buyers need to see the facts and figures.
It is also essential to automate systems with a focus on scalability. The more you can make frequent, repetitive tasks streamlined and seamless (e.g. sending triggered emails when customers and prospects complete specific calls to action), the more efficient your workflow will be. This is a key selling point.
Develop a Plan Now
Do some dreaming. Where do you see your business in a year? Two? Five? Ten? What are some strategies you can implement to solidify current operations and then expand? Create a roadmap for you. If you decide to keep the business, you can work on realizing these goals. If you decide to sell, you can show potential buyers that this is a business with a future.
We mentioned that a professional, unbiased valuation is critical. Enlist the aid of a professional with the right credentials (i.e. CVA, ABV, or CFA) to conduct an independent assessment. They will look at your assets, liabilities, and future earnings potential. You can be sure prospective buyers are going to be conducting their own valuations, so you want to be proactive here in order to maximize profits.
Anticipate the Next Steps – Even If You’re Not Ready to Take Them
Knowledge is power. It’s a cliche – and completely true. When you understand the process of selling your business, you can proceed confidently. You will need to:
- Put your business front and center of potential buyers. Wow them with your strong and compelling brand; reach into your networks; highlight areas of your valuation and long-term planning efforts.
- Take care of your people. If you have employees, you need to keep them on board. Word will spread fast, and competitors will try to poach your talent. Remember, they are a key selling point for your buyers, so hang on to them! Your customers also need that consistency. No one wants to feel as if they are aboard a sinking ship.
- Get comfortable with negotiations. This is an intense process, and you need to advocate for yourself and your business. You will need to negotiate when it comes to pricing, of course, but also deposits, settlement periods, training for new buyers, staff arrangements, inventory transfers, etc. Details matter, so get your ducks in a row, so to speak. And be prepared for counteroffers!
- Build relationships with accounting and legal professionals now in order to streamline the process. For example, you will want to iron out details as to how proceeds will be paid. An upfront payment is attractive – but you have to be aware of (significant) tax issues. It is essential that payments are structured in a way that is most advantageous.
- Start connecting with brokers. You will definitely want this professional on your side when selling, and it is imperative that you trust this person with your future.
Work with an Expert
Building a business to sell is proactive and future-oriented. It’s also highly complex. Make sure that you are positioning your business for success in the future – even if you are not at the helm. You also want to consider your own interests. This could be your nest egg or the seed money for a new venture after all.