For the business owners currently sweating blood and tears to make their venture a success, the thought of later selling up and walking away from the company might seem far off. Yet, at some point in the future you may want to see a return on all of your hard work, enabling you to take a step back, explore new challenges, or move away from a changing market.
The decision to sell your business is not one that can be taken overnight. Careful planning is essential if you are going to reap the rewards of all your hard work. Yet, all too often when it comes to selling their business, people get caught up in profit and turnover and forget who their potential buyers are and what they might be looking for.
Your business is only worth what someone is willing to pay for it, so it’s vital that you understand your buyer’s point of view.
Put yourself in their shoes
If you were looking to buy a company what would you want or expect? What would grab your attention and what would put you off? You should consider these questions if you want to make the most out of your business’ sale.
One of the key things a buyer will assess is risk. There is no point paying a large sum of money for a company if the business is likely to lose a significant proportion of its customers, suppliers or staff following a sale.
The infrastructure of the business needs to be able to withstand its sale, so you have to make sure that your company and its culture are transferable and compatible with the types of company that might buy you.
For example, does your business have contracts or regular orders? If you have customers who buy from you on a regular basis or long standing agreements with suppliers, consider turning the relationship into a contractual one.
Not only will this add stability to your company, but it will also give you something tangible that can be passed on to the buyer. Contracts give the buyer more confidence than ongoing business and this added security could add significantly to your company’s value.
Preparation is also key when it comes to your staff. Keep them in the loop, let them know your plans for the company and they will be more likely to stay on after its sale.
Make it easy
The purpose of buying a business is often a ‘short cut’, a quicker alternative to the years of work and effort that go into building a business from scratch. Therefore the more confidence that you can build in potential buyers and the easier you can make the process, the more attractive your company will become.
Leave something for the buyer
Sell your business before reaching the top. You do not want to try and squeeze every last sale out of your business before you sell, only then to find it difficult to find a buyer. Buyers will be looking for a return on their investment and will seek out companies that have the potential to grow. You will get far more value out of an exciting prospect than a spent force so be sure to sell the future, not the past.
A buyer’s agenda
Run your business as if it could be sold at any time, working to what you might see as a buyer’s agenda and not your own. You will need to plan well in advance to generate the most possible value out of your venture.