You have worked hard and built a viable business. Your business profits have supported your lifestyle, but now it’s time to sell your business. Maybe you want to retire, start another business, or take a gap year. Selling should be easy because who wouldn’t want to buy a company that makes money every month?
Not so fast. Buyers are actually looking for businesses that meet certain criteria. My company has acquired more than 20 other businesses. I speak from experience when I tell you that successfully selling your business requires planning with the exit in mind.
5 tips on how to sell your business
Here’s how to sell your business to a potential buyer like me.
1. Your business needs structure and processes
Most entrepreneurs do what needs to be done when running a new business. At first everyone does everything, and that’s how it should be. You make decisions on the fly and there are no rules or procedures to follow. However, if you want to sell your business, you need more structure.
Buyers look for a company that uses processes and a well-trained team to implement them. If your team needs you to make decisions or get work done, you’re not ready to sell. To get your business ready to sell, you need to create processes for your day-to-day operations and use them to get work done.
2. You need a stable management team
Exceptional employees and team members are important assets to your company because they attract customers and induce loyalty. However, your team members must be led by a competent and strong management team.
If there is no clear leadership within your organization, things fall apart once you leave. A potential buyer will not be interested in executing trades himself. If you want someone to buy your business, it’s time to hire and train a management team to run the business.
3. Your business model must be scalable
When I buy a business, I look for a scalable business model. It’s okay if you haven’t taken full advantage of your growth opportunities because you didn’t have the investment capital to scale the business. But your business must be profitable and have future growth potential.
Don’t wait until your business is stagnant to try to sell it because it won’t attract buyers. Instead, identify growth opportunities and do what you can to vitalize the business before looking for a buyer.
4. Must have internal documentation
I already shared the structure and processes requirement, but the documentation goes one step further. You may already have a way of doing things in the company, but only you and your team members understand those processes. That’s not helpful to a buyer because you can’t run the business without your core team members.
Document all the steps required to run day-to-day operations. This includes details on how to complete tasks and job descriptions for your team members.
You are probably not even aware of all the processes that occur in the company. It may take some time to complete this paperwork, but it will increase the value of your business.
Here are some documentation tools to put your processes on paper (digitally):
5. You need strong relationships
As a business owner, you have built and cultivated relationships with vendors, suppliers, partners, consumers, and customers. Those relationships are worth their weight in gold. To attract potential buyers, build your business around the people and organizations in your industry and showcase that network to potential buyers.
It is not easy to sell your business, and I know you have put a lot of sweat into your business. By following these proven tips, you will increase your chances of finding the right buyer for your business.
Learn from these successful outings
Selling your business can be intimidating. Fortunately, there are founders who have successfully exited their companies. Learn from their stories:
Not ready to sell your business? Learn to build one
If getting out of a company is your ultimate goal, then you need to build a business that is viable for sale. Fortunately, we are here to help. Check out our catalog of free training courses. From managing your mindset to setting up your finances for sustainable growth, we have the frameworks to build a business ready to sell.