This article looks at when you should start thinking of selling your business, and what to put in place to ensure you have higher negotiating power to get a better price.
Selling a business can be a difficult decision to arrive at, and more often than not, the offer presented isn’t perfect, or one that you’re not comfortable accepting immediately. The sales process is one that can be quite complicated, particularly if you are trying to negotiate the best possible price for your business, which as a business owner, you always should. This may sound strange, but selling your business is something that you should generally be thinking of from the time you start your business. The reason for this is so that you can set up and plan your business in a way that makes it far more attractive to a potential purchaser.
Aside from wanting to acquire businesses that are lucrative, or show the potential for reasonable profits, buyers also find businesses that offer unique value, are systematized and run smoothly on a functional, and operational level more attractive. Whilst this is easy enough if you started and developed your business with processes in mind, if it stemmed from an interest, and passion in certain area of work, took its own course of growth, and is run in a more ad-hoc manner, then this could prove difficult.
In essence, the best time to start laying down the foundations for those things that a buyer would look for in a business is from the first time you start making plans to start, develop and grow your business. Now please, don’t misunderstand me on the point of systematization- in no way do I mean that your business can’t have personal touches… quite the opposite, as this is often what differentiates one business from another and adds unique value, but instead, ensure that the vision, values, functions and systems are built into the business in such a way that you could walk away from it the very next day, and know that it could continue to operate effectively and efficiently.
It goes without saying however, that these visions, values and systems should all be the ones that are in keeping with a valuable product, great customer services, sales and retentions. Bear in mind that spending time on developing systems that should have been in place a long time ago will be costly, and it will make it far harder to sell your business when you’re interested in doing so.
I understand that it’s not always easy to develop a business within a model that allows for you to simply walk away from it. This is predominantly the case when your business is largely based on your personal brand, and is built around your own values, experience and knowledge. Whilst this is a little more difficult, it is not impossible. You just have to create a value system that’s in keeping with your personal brand so that even if you aren’t physically doing the work or involved, all that you stand for and deliver is implicit. As an example, think of high end restaurant chains that have a chef’s name as the brand. You don’t expect that chef to be cooking meals in every branch, but you do come to expect a certain level of value. Wherever possible, if your business has developed from your personal brand, work on mirroring the values and personality to create a business brand.
So there you have it! A few quick pointers to help you put your business in a great position to get the best possible price for it. If you’re just starting out, all of this may seem a little pre-mature… but it really is the way that many successful serial entrepreneurs think about business, and the reason they make as much money as they do when they sell! If you’ve already started your business, but don’t have your systems or business brand and values in place… get working on it. Sooner rather than later is best!