Although it might seem like there are many obstacles to starting a business there may be more when you exit. You may feel a little rude when it comes time to go. There may not be any buyers available, and those buyers may not see the business value you believe is obvious. How can you avoid having this negative view of your future?
It is important to plan ahead. There are two main ways to leave your business.
Locking the door behind yourself is the first. This is especially useful if your business is not doing well or you know that you will be leaving soon.
The down side? The downside? There is no nest egg, or, in the words of regular employees, no pension.
You should probably consider the second option unless you are independently wealthy. Note: If your inventory or land has increased in value, this does not apply to your so-called business. In that case, you have been creating cash flow while waiting for your real business – your asset- to appreciate. Option 2 is still an option.
Option 2: Create and demonstrate value to potential buyers by planning ahead. These steps will likely look familiar as they are similar in nature to those you would use to identify your market.
If you are selling widgets for example, it is likely that you discovered who bought widgets when you started your business. This will help you to determine what makes your widgets and company special and worth the customers’ attention.
The same process will be used to help you sell your business. Your products will play a significant role, but the entire business will also be considered. Remember that you are selling your company and that your goal is to sell your business. Potential buyers may not feel the same way if you bristle about the business’s history and how it was built around your expertise and skills.
These are key questions that will help you determine if your business is attracting buyers.
1. Are you the main selling person?
– It may prove difficult for the buyer to enter and maintain sales at your level. If the business relies on your skills, you should leave ….
– The solution is to create tools and sales processes that are easily replicated by others. Hire a salesperson to prove it and let them succeed.
2. Are you the primary resource for your product/service?
It is not a good sign to have you as a key resource in delivery. Your business should be capable of standing on its own without you. That’s what your business is selling!
– Create processes and tools that are easily replicated by others. (See a pattern?) Your’secret sauce’ is what makes you successful. However, it shouldn’t be something that you only know how to make or deliver.
3. Is your product simple and not trademarked?
This might not be an issue but someone who can easily replicate your product will be able to add value elsewhere in your company. Potential buyers will have to either create a new product or be aware of competition.
– Solution: Know your business’s value. This includes your products and other aspects of your business. You should also understand the barriers that may prevent you from entering into competition. If they aren’t there, then create them.
4. Are you able to provide systems for all ‘back office’ components?
Prospective buyers are looking for a business that they can easily operate and one they can trust. It’s similar to buying a house. The houses that sell at a reasonable price are well-maintained and all work. The buyer will expect a lower price if it is a fixer-upper.
– Create systems in your business that are designed to attract potential buyers.
5. Are you in a major change environment for your business?
Depending on the business you run, the ‘environment’ may refer to your physical environment, your industry, and your suppliers and customers.
– Solution: This is difficult because it is out of your control. You have the option to choose when is the best time to sell. Although years ago might have been the best, the future is your only option.
You may think it’s time to sell your business, and that someone should be happy that you didn’t have to put in all that work to get it started; but chances are that that won’t happen. You should approach the sale of your company as a businessperson. Display and create as much value in your business as you can. Show potential buyers that they can still make money after they pay the purchase price. That’s what they want!