12 Days Of Tipmas Day 11: Grow With A View To Sell Your Business
While it may not be in your imminent plans to sell your business, selling your business later down the line can provide financial stability when you’re thinking about retirement, starting a family, or maybe when you just want a change of pace in your life. With that in mind, how would you make your business attractive to potential buyers?
Succession strategy – have a potential successor identified early on, show them what it takes to run the business and take time to mentor them so that the transition to a new owner is as smooth as possible. You could also consider whether to stay on as an advisor or to exit the business entirely.
Experienced employees – managers and staff who are staying in the company will make the transition to a new owner smoother as they have experience with the ins and outs of the company.
Financials – financial records as well as sales forecasts are important when pitching a business; buyers would like to know that the business is profitable and that going into the future it will continue to be the same. Make sure you are able to explain any previous blips in your figures to potential buyers.
Customer relationships – how diverse is your customer base? You should consider diversifying if one single client or customer accounts for over 25% of your sales – relying on only a few clients is a big risk if one of them stops using your services. Diversification takes time however, so plan to diversify early.
Future growth opportunities – which direction do you think your business will go? Buyers will want to know this too, so it would be important to share any strategies or new ideas that have not yet been implemented in your business. Where will new customers come from, and how can the business expand with any developments in technology or events?
Reputation – you need to make sure that your company reputation is great, both with your clients and employees. A company with a tainted reputation will be hard to sell, and potential buyers may have to consider rebranding if a company has a bad history.
Intellectual property – is your company adequately protecting its IPs? Having other companies copying ideas from your company and selling it as their own would cut into profits down the line, so make sure to protect your IPs. If your company has any original technologies or ideas, make sure they are protected by copyright, trademark, or patent law.
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