How to Sell Your Business
The trick is to make sure it’s set up for a sale in the first place.
So many businesses I work with couldn’t sell even if they wanted to because the business operations are solely reliant on the owner driving them, they have no written systems and processes in place to create consistent results, and they have a weak asset base, large debt profile or no recurring revenue guarantees (client service contracts).
Selling the business is the easy part, it’s setting it up for the sale that takes time and effort.
To maximise your business valuation you need to:
Reduce overhead costs by automating business processes
Produce a written Operations Manual detailing every single process your business uses on a day-to-day basis - ‘what’s the best way to get the best results, in the least amount of time, with the least amount of effort’ is essentially the question this document should answer about every aspect of your business
Create an inter-dependent culture where your employees are self-sufficient and competent at problem solving
Create ‘Contracts for Services’ for all of your clients to demonstrate a strong order book, long term client loyalty and strong recurring revenue streams
Reduce your debt profile as much as possible
Keep detailed and up-to-date financial records, including a 3-month (minimum) cashflow forecast
All of this is about setting the business up to run without you, which is what counts if you want a decent valuation when you sell your business.
When you’ve done the leg-work and you’re ready to actually sell it, you can simply list it with one of the many business brokers and they will find buyers for you.
However, if you do a good job of setting it up to be sold, and make a big enough noise that your competitors notice you, you’ll probably have them approaching you to buy you out and remove the threat to their business. Be a threat to your competitors! The more of a threat you are, the more money they’ll be willing to part with to buy you out.
Make a list of competitors who would benefit from buying your business and start working to take their market share. It won’t be long before they come knocking down your door with an offer.
What’s your ‘Business Health Score’? Take the ‘Business Health Check’ quiz to find out!