Posts tagged with: value of the business
Why would you ever want to sell your business? The best reason is that you’ve accomplished everything you set out to do. So when you sell, you want to be sure you’ve done everything to assure you command top dollar.
To sell your business for top dollar, be diligent applying these three strategies:
- Prevent Seller Neglect – Just because you’ve decided to sell, doesn’t mean you can neglect the business. You must do everything you can to increase sales, momentum, and customer loyalty right through the exit process until the transaction is done.
You must keep you eye on current and forecasted sales. Your buyer will pay more for the business with proven increasing sales and forecasted accelerated growth than for declining or stagnant sales with nothing new in the pipeline.
- Remove yourself from day-to-day operations of the business. You need the buyer to see that the value of the business he’s buying is in the business, not in you. To maximize the value of the business, you must demonstrate the business can be self-sustaining without your daily presence. They need to see customers, your team, your vendors engage and commit to do business with your company because of the business, not you.
To do that, train your management team to take on all your responsibilities (not cold turkey but over time). Build the infrastructure to support them to do everything you’ve always done. The more systems, structure, processes and procedures you have, the more valuable the business. You can monetize every operational task and responsibility that you delegate and transfer to your team.
- Reduce the personal perks and benefits you take from the business. There are many ways that small business owners can have the business pay for conveniences and luxuries. However, when it comes time to sell your business, buyers will be willing to pay well for your profits. So if you are taking money out of the business for personal expenses (legally), you are reducing profits. That’s not appealing to them.
When it’s time to sell, separate your personal and business expenses. Stop using the business to bankroll family dinners, vacations, cars, country club memberships.
Maximizing value is the key to selling your business for top dollar.