When it comes time to sell your business, there’s no coming back. You want to maximize the value of your business so you can sell it for as much as possible and fund whatever venture comes next. Many business owners find out that their business isn’t worth as much as they had hoped, but if you follow these tips, you’ll be on your way to getting more out of your business when the time comes to sell.
Obviously, when it comes to the value of a company, some things will be out of your control. With any business, values fluctuate as the industry of whatever you’re selling changes. However, sometimes the key to selling a business is just making it look more appealing to buyers, which doesn’t always involve increasing the cash value of it.
Simplify the business
If a buyer is interested in two businesses, they will usually go with the one that’s more streamlined and has seamless processes. Why? Because it’s easier to run a business that already has everything laid out for them before they get there and it will be less likely to crash after the purchase is made. In addition to this, you want these processes to be well-documented so you have something to show the buyer and reassure them that the business can be easily managed without the original owner there.
Create committed employees
Directly related to the last tip, you need to have employees that know what they’re doing and who are invested in the company. You shouldn’t stop at having a solid foundation and documentation for running your business successfully. You need to have employees that know these processes and who can perform them without your constant involvement. This goes for all levels of the company, but especially in the upper management because you don’t want the new owner to have to start hiring people right after they purchase it.
Know how your product is different
Believe it or not, some businesses can survive without a sense of direction and it should be your goal to make sure your business isn’t one of these. How do you do this? Make sure your company differentiates itself from its competition. If you provide the same services as everyone else and market it that way, your company won’t be very appealing to a buyer because it’ll seem like there’s no way to grow or attract new customers. Buyers need to know that you have a sense of direction and purpose with what you’ve done for the company.
Timing is everything
Don’t wait too long to start looking for buyers for your company. If the product or service you sell is currently in high demand, there’s no better time to sell than the present. Your company will be more appealing and you’ll get more money out of it. If you wait too long, the business could plummet and you’ll be getting a lot less out of it than you expected. Chances are nobody will want to buy it in that state anyway because it will seem like you’re escaping the business before it gets too bad.
Another thing you want to make sure you do is to close out any contracts, leases, or construction projects before the company is sold. This will be more appealing to a buyer because they’ll have less to deal with once they take control. Generally, giving the new owner less to deal with and more time to learn the company and its processes before getting into the nitty-gritty is a good thing and will increase its appeal.
If you need more information on selling your business, contact an ENLIGN advisor today! We provide business sellers with discrete, objective counsel and valuation advice, and an innovative approach to marketing businesses.