Are you considering selling your business?
Is it already on the market? Do you think you have what it takes to be a true serial entrepreneur, building startups from scratch and selling them for profit with an Elon Musk-like Midas touch (well, minus the exploding Tesla engines, of course)?
Your ability to do so comes down to the marketability of your business. So, you are probably wondering, “what does that mean, eh, exactly?” Good question.
Simon Merchant, founder of The Merchant Report, an online business appraisal tool, says, “A lack of preparation for sale in today’s heavily weighted buyer’s market can dramatically extend the time required to find a willing buyer, or even render the business unsaleable.”
How do you prep your business for sale? There is more to it than you might think.
1. Ya gotta have a plan
A business sale typically involves a broker. It is a good idea to involve a broker early on in the process. A good broker can help you identify steps needing to be taken and develop a plan that will help you navigate the sale of the business.
Working with a broker, as well as your entire team, and trusted advisors will help your position your business for sale.
2. Learn from your industry
Have other businesses (even competitors) recently sold? You can learn a thing or two about the valuation of your business by looking at recent sales in your niche.
Your competitors can teach you a lot, actually. Did some shortcoming (like a malfunctioning revenue model) hurt the valuation of a recent sale in your industry? As you work on your plan, you can find ways to differentiate your business in comparison with recently transacted businesses, and fetch more cash in a sale.
3. Streamline the operation
When it is time to sell, it is time to get lean – and we mean really lean. Pre-sale preparations should include some or all of the following:
- Reduction of payroll
- Tight control of expenses (including office supplies)
- Increase pricing and adjust volume (if it will show greater margin)
- Uncover hidden opportunities to profit (like a change in the supply chain)
- Review all aspects of operation (including partnerships) to make sure they are truly adding to your business’ valuation
You might consider a variety of other actions when prepping for a sale, but those are some of the most common actions companies take to maximize their valuation.
Also, don’t forget to ask an expert
Merchant, whose site offers a variety of free tools that are handy for startup owners looking to sell, says, “Be objective and conservative when deciding if your business is ready for sale” says Merchant.
“Many strengths of a business can be enhanced, and weaknesses mitigated, by creating a very simple SWOT Analysis and Action Plan, for implementation during the time you can afford yourself prior to market – many at little expense.”
Got all that? If so, chances are good that your startup is ready to sell. Welcome to the world of serial entrepreneurship.