How to Sell Your Business: 5 Tips from a Business Investor
You’ve worked hard and built a profitable business. Your business profits have supported your lifestyle, but now it’s time to sell your business. You might want to retire, start another business, or take a year off. Selling should be easy because who doesn’t want to buy a business that makes money every month?
Not so fast. Buyers are actually looking for companies that meet certain criteria. My company has acquired more than 20 other companies. I speak from experience when I tell you that successfully selling your business requires exit planning.
5 tips to sell your business
How to sell your business to a potential buyer like me.
1. Your company needs structure and processes
Most entrepreneurs do what needs to be done when running a startup business. In the beginning everyone does everything, and that’s the way 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 company, you need more structure.
Buyers are looking 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 the job done.
2. You need a stable management team
Exceptional employees and team members are an important asset for your business as they attract and retain customers. However, your team members must be led by a competent and strong management team.
If there is no clear leadership in your organization, things will fall apart as soon as you leave the company. A potential buyer will not be interested in running the business themselves. 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 company, I look for a scalable business model. It’s okay if you missed your growth opportunities because you didn’t have the investment capital to scale the business. But your business should be profitable and have future growth potential.
Don’t wait until your business is stagnant to try to sell it as it won’t appeal to buyers. Instead, identify growth opportunities and do what you can to vitalize the business before looking for a buyer.
4. You must have internal documentation
I’ve already shared the requirement for structure and processes, but the documentation goes one step further. You may already have a company procedure, but only you and your team members understand these processes. That doesn’t make sense for a buyer as they can’t run the business without the core members of your team.
Document all steps required for day-to-day operations. This includes details on how to perform the tasks and job descriptions for your team members.
You are probably not even aware of all the processes that take place in the company. It may take time to complete this documentation, but it will add value to your business.
Here are some documentation tools to put your processes (digitally) on paper:
5. You need strong relationships
As a business owner, you have established and maintained relationships with vendors, suppliers, partners, customers and clients. These 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.
Selling your business is not easy and I know you have put a lot of sweat capital into your business. By following these proven tips, you’ll increase your chances of finding the right buyer for your business.
Learn from these successful exits
Selling your business can be intimidating. Fortunately, there are founders who have successfully left their companies. Learn from their stories:
Not ready to sell your business? Learn how to create one
If getting out of a business is your ultimate goal, you need to build a business that is viable to sell. Luckily we’re 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 framework to build a business that’s ready for sale.
