How Do You Grow a Business to the Point You Can Sell?
Some entrepreneurs view their business as their legacy and dream of passing it down to the next generations. Others view it as an asset that they can leverage for current needs and future goals. If you want to “cash in,” so to speak, a big question on your mind is, “How can I grow my business for sale?” If this is the end goal (or even if it currently isn’t but you want to leave the door open to possibilities), there are several steps you can take today for a more profitable tomorrow.
How Can I Grow My Business for Sale?
Action you take now positions you for an advantageous transaction – and transition – when it comes to a sale.
Ensure You Have a Process for Recurring Revenue
Can you sell a business that is not profitable? Yes. There is an investor out there who will buy it – for the right price – and who has the experience and skillset to turn around a company that isn’t turning a profit. And by right, we mean right for them. There are situations in which this makes the most sense. To you, what should be an asset (i.e. your business) has become a liability and a burden. You may want to cut your losses and get out. But to them, they may see another potentially profitable asset.
Obviously, it is far more advantageous to sell a business that is profitable. This is true not only in terms of the purchase price, but also the pool of potential buyers. The average entrepreneur or business owner doesn’t want to hop aboard a sinking ship. They want a company that is viable and can turn a profit if not immediately, then relatively quickly.
Ensuring you have a process in place for recurring revenue is critical to a beneficial sale. It shows prospective buyers that they would be making a solid investment. Recurring revenue is, no surprise, revenue that is consistent.
One strategy is building a membership program. We are seeing this in virtually every sector; membership programs run the gamut from Stitch Fix-style clothing programs to fitness websites that deliver exclusive content, videos, recipes, etc., to members. You can structure your program around either physical or virtual products.
Another option is to build service or retainer programs.If you are in a sector like graphic/web design, for example, you can create a program that delivers fresh marketing materials to subscribers quarterly. This saves them time – and you from having to pitch and present every few months.
There are a host of different ideas to generate recurring revenue. The key is to implement a program or process that makes sense for your business and aligns with your offerings, as well as with customer/client needs.
Create a Business That Works Without You
The more you put the right people and processes in space, the less your business should “need” you. You may even begin to feel redundant or superfluous. This is perfect! That’s exactly what you want when you are growing a business for sale – and it is what prospective buyers want as well.
As you grow, with the intention of selling:
- Build a strong team. How can I grow my business for sale? The single biggest favor you can do for yourself (and your company!) is to assemble a killer team. You don’t know everything and you can’t do everything – and you don’t have to. When you take your time and hire right, it more than pays off. From marketing and sales experts to executive assistants, be sure to stock your team with smart, savvy, motivated people.
- Get out of their way. Build a team… and let them do their jobs. Avoid the temptation to micromanage or to step in whenever there is a problem. Let them figure it out. Perhaps the scariest piece of advice for business owners! But this empowers your team to develop solutions – many of which you would never have thought of and could lead to greater efficiencies.
- Go away. Schedule yourself for a vacation for a week or two. And actually take it! Make yourself unavailable: unplug. (If this is too much, specify that you can only be contacted for emergencies. The building has to be on fire, or a major client has to be threatening to walk. Other than that, it’s up to them.) Again, this is about building a team – and building them up. Show them that you trust them.
- Make strategic improvements. Did the company run like a well-oiled machine in your absence? Were there minor issues? Major issues? What types of challenges did your people face, and how did they solve (or attempt to solve) them? Use this information to make key improvements so your business does not need you.
When addressing the question, “how can I grow my business for sale?”, there is, of course, far more to it than building recurring revenue streams and empowering a strong team. It is a complex process, and AMB Performance Group offers the advice, guidance, and support you need to navigate it with confidence.
Contact AMB Performance Group to learn more.