As an entrepreneur, you have thought long and hard about the possible sale of your business and after careful consideration you have finally made the decision: you are mentally ready to sell your business.
Just as important is: is your company also ready for sale? A question to which there is no simple answer. Yes, in principle every business can be sold, but at what price and on what terms is a much more important question to ask.
If you have a particular plan, desire or simply a minimum price in mind, it pays to look at how ready to sell your business is and what you can do to improve it. After all, sales readiness is not an on or off switch, it is a spectrum in which you can go up or down.
Looking through buyer's glasses
Having a "good" business and having a "sellable" business are two different things. Every business owner makes strategic decisions to ensure that the business remains future-proof over the long term within the constantly changing marketplace. The right strategic decisions ensure that the business increases in value over the long term. Here the focus is on having a "good business.
However, if you want to eventually sell a business, you have to look at it through a different lens. Namely through the eyes of a potential buyer. As a business owner, you must therefore broaden your focus from creating value to optimizing the potential sales price. After all, value and price are not the same thing.
This means that even in the run-up to a possible exit in x-number of years, you have to be continuously busy with the question of whether or not certain decisions contribute to optimization of the potential sales price. As an entrepreneur, you need to promote this thinking in all strategic decisions, large and small.
Change in thinking and doing
This (new) way of thinking will lead to other choices as an entrepreneur. For example, consider adding revenue outside the core business. While more revenue can increase cash flow, it also requires time, dedication and resources that might have been better spent on core business activities.
After all, it is also not guaranteed that a buyer will see value in these "new" revenue streams and new activities. So in the long term, a new revenue category can be value-enhancing, while in the short term it may not improve the potential sale price in the event of an exit.
Besides this example, there are countless considerations and aspects that buyers find important when evaluating your business. In the video below, my associate Lars de Bruin mentions three practical tips to prepare your business for sale and increase the potential sales price. Consider having a good story to create an attractive (future) outlook for your business. Because a buyer ultimately buys the future and not the past.
In addition, make figures transparent so that fact-based decisions can be made that are not based purely on the entrepreneur's gut feeling. Finally, as an entrepreneur, step out of the daily operations and put together an independent management team that can manage the company operationally, so that the continuity of the company is guaranteed even after the sale.
In conclusion
Getting your business ready to sell is an ongoing process with no finish line. It starts with a different way of thinking about your business and results in strategic decisions to make your business more attractive to potential buyers.
Within Qufinity we have developed an Exit-Ready program based on years of deal experience in which we use our dashboarding tools to support entrepreneurs within this process. Together with entrepreneurs we go through all pre-buyer-relevant aspects to improve your business, which ultimately leads to an increase of the potential sales price of your business.
