By Marcia Riner | May 7, 2021
Any business can be sold. It doesn’t have to be a big M&A deal or have to have a minimum price tag. There are plenty of entrepreneurs, employees that dream of running the place, or competitors that would be open to the idea when you have a business worth selling. Your selling price hugely depends on your offering, revenue, team, & systems you have in place. In this blog, you'll learn the 3 main indicators that will tell you if your business is worth selling.
Hey there! My name is Marcia Riner and I'm a serial entrepreneur with over 25 years of experience in building businesses from scratch and turning them into profitable companies. Today I want to talk about an important topic - whether or not you can sell your company. It's something everyone thinks about at some point but it can be hard to know if it is even possible for you.
This topic is close to my heart. I watched my mom and dad each create businesses that were profitable and created a great life for all of us but they didn't position themselves to sell it. Mom was offered a great deal at the height of her business and turned it down because she wasn't ready to retire. She could have just stayed on as a consultant for the next few years. When 2008 hit, she closed her doors ending up with some office furniture. Dad didn't master his finances. While running what he thought was a profitable company, his employees made great commissions but he shouldered all the expenses out of his pocket. In the end, the books were a mess and the company wasn't worth selling. He closed his doors too but if had he done a bit of restructuring, he could have sold it. I've learned some great lessons in my business career and creating a business that is worth selling is one of the biggest.
So today, I'm going to share my top three signs that let me know whether or not it's your business is worth selling.
It all starts with you. Are you the star of your business? Is your business owner-dependent? When a business is built solely around the owner, it can be difficult to sell. The problem with selling an owner-dependent business is that the owner is essentially the brand. You'll need to make sure your business to be attractive to a future buyer that will take over the business and make it their own.
First - you want to make sure that the business has clean financials. What this means is that all of your financial reporting make sense and showcases a strong financial business. Note you should not be doing your own accounting! Accounting is not expensive and can help you make better financial decisions. You'll want to make sure that the income has been broken down by service or product and each has had a progressive increase over the past 3-5 years. As for your expenses and debts, take time to reduce unnecessary expenses and show that you've used financing in a positive fashion. This is also a perfect time to review your accounts receivable, getting your customers to pay on time is a good thing. One of the most important pieces to your financial snapshot is your cash flow. How well you are managing the money coming in and out is key. Your future buyer will be looking over your income and expenses to support their purchase price. A business that is in a financially strong position is very attractive.
Second - you want to have strong relationships with your customers and vendors. Will these relationships endure a transfer of power? Your customers are a big part of the purchase. Having true and raving fans of your business can increase its value. Nurturing that relationship is key to repeat and loyal customers.
Your vendors are just as important. They provide business services for an agreed-upon fee or commission (or both), so providing them with accurate information on time should be a high priority. In some cases, these people may also extend guarantees which could affect their future relationship with their client companies and suppliers when things don't go as planned.
Third - How strong is your current marketing strategy? Your business will be worth a lot more if you have an active marketing campaign going on that brings in new customers. Do you have a mix of organic and paid marketing that pays for itself while building a list of engaged people who will buy your product or service someday? Building out a proven plan that works now grows your business today and is also very attractive to future buyers.
There are many other ways to strengthen your business and make it marketable to future buyers. Creating a saleable business is not easy. But without a plan that is sustainable, you will end up with a business that may be valued at $0. Avoid wasting the time you spent building your business, the nights, weekends, blood, sweat, and tears along with a lot of your savings, and build a business that is worth selling someday in the future. Build and grow your business with the end in mind and you have something worth selling. When you do, you’ll make a profitable business for you now and a decent base for your retirement later on.
If your curious about turning your business into one that is worth selling someday, book a complimentary, no pressure call with me, and let’s see what you can do to get started today. I’m happy to share my ideas! https://calendly.com/trajectory-consulting/30min
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