It’s rare for an entrepreneur to start a business with the goal of selling it. Most believe they can build a better widget or deliver a better service and plunge in without thinking about their eventual exit.
But deciding early on to sell (someday) will help you build a valuable business that will be attractive to others when you are ready to exit. And, during the process, you’ll enjoy the benefits of a more profitable, productive, streamlined and efficiently managed business. Below are three tips to guide you as you build to sell.
FOCUS ON THE END GOAL
Once you make the decision to build your business to sell, you’ll think a little differently. Your mindset will shift, and you’ll act with intention to achieve a goal. Be sure to set a timeframe for achieving your goal to sell, then track the growth of your business, identify setbacks and course correct quickly.
MONITOR THE VALUE
The decision that you’re building to sell will lead you to think about your business as an asset, one that you are grooming to sell for a specific dollar amount. To ensure your asset is growing in value at an acceptable rate, get a market-based valuation done early on. If there’s a gap between your target sale-price and the business’ current value, develop and implement a plan to close it.
Many business owners wait until they are ready to sell to get a business valuation and are surprised when its less than they thought it would be. If you wait until you’re ready to sell to find out how the market sees your business, you won’t have time to implement the changes needed to increase value.
Avoid this mistake by knowing how a buyer perceives business value. Educate yourself by attending seminars and talking to business sales and acquisition professionals.
DON’T GO IT ALONE
Rely on advisors. There are many great resources available to Kansas City entrepreneurs to help build and scale businesses. Most will be able to provide some advice on the process of selling a business. To get the most accurate information, work with a business intermediary (a business broker, mergers and acquisitions professional or investment banker).
Business intermediaries can help you understand how the market will value your business, the process of selling and your most likely buyer. Specialists have fees, but if you choose the correct advisors, you’ll also avoid costly mistakes and net more from the sale of your business than if you go it alone.
Building to sell will increase a business’ value if you do it well. It will take time and effort, yet the process can create a business that becomes more profitable, easier and more fun to own with each passing year.
The bottom line is that you’ll have created an asset that is attractive to others, and you’ll be able to decide when to exit.
Join Thinking Bigger for an upcoming panel discussion on exiting your business, featuring Valerie Vaughn as a panelist! Whether you’re ready to sell now – or years from now – this panel is for you! Learn how to build value in your business today, so you can enjoy it now – and eventually get more when you do sell. More information and tickets are available here.