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Six Powerful Strategies to Make Your Business More Sellable
By Quiet Light
Implementing key strategies to make your business more sellable can go a long way to helping you maximize your success. By taking proactive steps long before you plan on selling, you increase your chances of getting a higher purchase price, better deal terms, and a smoother transition process at closing.
In this article, we discuss six powerful strategies to make your business more sellable. These include:
- Focusing on high-growth activities
- Making your business easier to transfer to a new owner
- Timing your exit right
- Implementing effective systems
- Improving your business’s documentation practices
- Working with a qualified Advisor
Driving Growth and Increasing Revenue
Almost all potential buyers are looking to purchase a business that they feel confident has the strong potential to grow into the future (the exception would be strategic buyers). For them, strong expected future growth is the easiest and surest way to secure a healthy return on their investment.
As a business owner, you can work to enhance the sellability of your company by driving consistent growth prior to listing your business. Strong past and current growth is a good indicator that the company is likely to continue to grow in the future. This will be attractive to a prospective buyer.
As your revenue and income grow, so too will your business’s value. In addition to helping create an easier sale when you do decide it is time for an exit, you will receive a higher final sales price. The financial performance of your company will have a direct impact on the ease with which you can sell it as well as how much you can sell it for.
There are many tools available in your toolkit for driving growth. The right tool for the job will depend on your specific business. Perhaps there is an opportunity to diversify or optimize your marketing channels in order to drive leads and win new customers. Or, you may be able to launch a new product to drive revenue.
Making Your Business Easier to Transfer to a New Owner
Your business is only valuable to a new owner if they can take over management of the company without negatively impacting the performance of the business. The ability for a business to change ownership without negative repercussions is called transferability.
All other things being equal, the more transferable a business is the more sellable it will be. For example, let’s say the net profit of your business would likely take a dive under new ownership. In this case, prospective buyers will be less interested in purchasing your company.
There are many things you can do to make your business more transferable in order to increase its sellability. For starters, if your name, image, or personality are closely associated with the business, work to remove them from your operations. If you run a travel blog that regularly features your adventures, for example, you may gradually change the content of the site to focus more on destination guides or gear reviews.
The best time to work toward increasing the transferability of your business is long before you plan on selling it. Don’t wait until the last minute. Depending on your starting point, creating an easily transferable business can take some time. Preparation is key for a smooth exit.
“There are many things you can do to make your business more transferable in order to increase its sellability.”
Timing Your Exit Right
Aside from various internal performance characteristics of your online business, the timing of your decision to sell will have an impact on how easy it is to find qualified buyers. When it comes to choosing the right time, there are several factors to consider, including:
- Business growth
- Industry trends
- Seasonal trends
As we have already discussed, strong business growth is attractive to a potential buyer. By choosing to sell your business during a period of strong growth, you will likely attract a greater number of interested buyers.
This increased competition will help you achieve a higher sales price. In addition, more interested buyers will allow you to win more favorable deal terms. With more leverage on your side, it will also help create a smoother transaction process.
In addition, selling during a period of strong industry growth will increase the sellability of your business. If your business’s industry is growing, it is a signal that the market conditions are right for your business to continue growing. If you have the option, list your business for sale during a period when your industry is growing.
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It is also helpful to take into account seasonal trends when choosing the best time to sell your business. In general, most businesses see an increase in sales and revenue in the lead-up to the holiday season. If this holds true for your business, the several months before the holiday season could be a good time to list your business. By doing so, you may attract more interested buyers.
Other companies may experience different seasonal trends. For example, if you have a business selling pool toys online, your busiest periods of the year would likely be spring and summer. The bottom line is you can help increase the sellability of your business by paying attention to the seasonal trends of your particular company.
“If you have the option, list your business for sale during a period when your industry is growing.”
Creating Efficient Business Systems to Make Your Business More Sellable
Any serious buyer interested in your business will want to determine how difficult it will be to run your company after they take over ownership. They will also want to know the level of time commitment they will need to dedicate to the business. The easier it is to manage and the less time it requires, the more sellable your company will be.
You can do this by creating efficient business systems and processes. This may include drafting standard operating procedures that are clear and easy to follow. In addition, you may also consider building out teams to fulfill certain tasks of your business.
If you run a content site, for example, you could hire a content strategist, writers, and editors to handle the workload of content marketing. In addition, you may want to hire a management team or an accountant to manage your financial metrics and statements, freeing up more time for you (or a new owner) to focus on other big-picture tasks.
“The quality of your business documentation also has an impact on how attractive your company is to prospective buyers.”
Improving Your Business Documentation to Make Your Business More Sellable
The quality of your business documentation also has an impact on how attractive your company is to prospective buyers. Clear documentation is an important part of any profitable exit strategy. If you haven’t already, be sure to create clear financial statements. In addition, it is helpful to go through your business operations and document all important aspects.
This may include marketing plans and methods, manufacturer relationships, legal documents such as articles of incorporation, and more. In addition, you may want to create a cohesive business plan. By creating clear and concise documentation, you make it easier for an interested buyer to examine and verify the performance of your business.
Proper documentation also helps instill a sense of trust in the new buyer that you have run your business in a responsible manner.
“Long before it comes time to list your company for sale, you can work with a broker to provide advice on how you can make your business more sellable.”
Working with a Qualified Business Advisor
When it comes time to sell, many business owners wonder whether they should sell their business on their own or work with a business Advisor. There is no one universal right answer; however, it is important to consider which option will lead to the best outcome for you and your business.
A qualified Advisor brings many benefits. Long before it comes time to list your company for sale, you can work with a business broker to provide advice on how you can make your business more sellable.
As we mentioned before, it is important to prepare your business for sale long before you plan to sell it. This way, you can increase its sellability, create a higher final sales price, and win more favorable deal terms. The right broker will help you through this process, allowing you to make the most of your exit.
Your broker will likely start by conducting a thorough business valuation. In addition to letting you know how much your business is currently worth, the valuation will also provide helpful information about the strengths and weaknesses of your business. Armed with this information, you and your Advisor can come up with a plan to optimize your business to ensure you create a successful exit.
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