You never know when a good selling opportunity will come up, so it’s always a good practice to groom your business according to some clear best practices and be ready to make that life changing transaction instantly. Constructing an environment surrounding your business where you can assure potential buyers that things are running smoothly is a process that requires patience, but the reward of knowing you can attract investors and buyers at any given moment is immeasurable.
The best way to determine whether your business is salable is to answer some simple questions:
- What impression does a potential buyer get when looking at your business?
- Are you able to respond to possible bids?
- Do you have a business plan outlining your growth strategy?
- Can the business succeed without you, the leader?
The most important question you need to ask yourself is how much is your business actually worth in today’s market? You need to have a number backed up with facts and figures, so you’re able to negotiate the best deal for you and your team. Keep an keep an eye and ear open for similar deals happening around you. Also keep in mind the added value of building out internal processes that mean a lot in the eyes of potential investors.
Increase The Value Of Your Company
Your goal here is to minimize the risk of investment in your company and at the same time maximizing the value of your business so you can receive the desired cash consideration when making the sale. You also need to think about your early retirement, long-term employment, or building a fund for future investments, and the future of your employees throughout the process.
The Financial Side
The core of a good financial background for your operation is a rock solid business plan that includes a financial projection for the next 3-5 years, as well as an explanation of the potential scalability of the company.
Don’t leave everything to dry revenue data. Present your industry with the help of a PEST (Political, Economic, Social, Technology factors) analysis and showcase your position through a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.
Combine your business plan and all the analysis included with a review of your financial statements and a graphical presentation of your perfect customer persona.
How is your managerial team transferring your idea to the employees of the company, and is there anyone among them capable enough to succeed your place on the board? Outline crucial personnel and try to predict the way they’ll react when they hear a new boss is coming to the office. Don’t forget to construct a table with all the connections you have with third parties like suppliers and manufacturers, which are a part of every process you’ve developed internally.
List every piece of property you own – including intellectual – so you can increase the value of your business. No matter how simple it may sound, a quality set of entities you own may make or break a deal. Keep inventory of everything you possess, rent, or invest in, so you have a well-organized unit to present in front of your buyers.
Due Diligence Documentation
Besides all of the contracts you have with clients and service providers, you’ll need to explain the brand you’ve developed over the years and all the relationships you have with other companies in the industry.
Place yourself in the shoes of a potential buyer and try answering all the questions they may have about your business, with analysis backed up by data. Trying to create the idea of a successful company through business plans and financial statements is a lot harder as the business starts aging, so start collecting data about the way you work from day one.