You’ve dedicated years, maybe even decades, to your business. So don’t gamble when it comes to turning that work into cash as you plan an exit. Exit planning begins with assessing the opportunities and risks a buyer would likely see during due diligence. This empowers you to proactively position your business for a lucrative sale, while marketing to the right buyers.
Here are 11 strategies that can add real value to your business, if you implement them right:
- Make yourself unnecessary. If you’re vital to the daily operation of your business, then your departure presents a major risk. Empower and train your team to run the business in your absence. A reliable management team is worth their weight in gold.
- Devise and create a centralized information repository. Reporting and information capture add real value by streamlining various processes. They also expedite the due diligence process.
- Reduce customer concentration. Buyers looking at your finances should see minimal risks. The fastest way to do this is to minimize the effects of the loss of a customer or two.
- Differentiate yourself from competitors or build barriers to entry. The most competitive companies make it hard for others to enter their space. Witness how Facebook dominates social media by being the site most people uses, thereby putting all competitors at a disadvantage. Your company must stand out, either because of your specialty or products or because other companies do not have the same opportunities or advantages.
- Be mindful of company, market, and industry dynamics surrounding your exit. Don’t leave as your value is declining or the market is crashing.
- Focus on scalability. Your business should be able to support a company two to three times your current size in a year or two. If it can’t, focus on remedying this.
- Pursue an audit before a sale. This should include a sales tax audit. This reduces the likelihood that value will drop during the exclusivity period.
- Set plans for future growth. You need a growth strategy that honors your unique product, reflects your vision, and displays your understanding of the market.
- Build consistent business performance. This makes future projections more reliable, and opens access to a premium sale price.
- Hire a skilled, expert advisory team. Your sales advisory team should have many sales under their belts, enabling them to anticipate challenges, support you at the negotiating table, and advise you about fair deal terms. Don’t rush the selection process. You’ll be spending a lot of time with your advisory team, and their insights can make or break the deal.
- Be emotionally prepared for the deal. Where are you going next? What will happen with your personal finances? You must be prepared for the next chapter, or you may unconsciously work to sabotage the deal. This deal should feel like a long-awaited dream come true, not something you’re dreading. If you’re not emotionally ready to part with your business, you’re not ready at all.