Most entrepreneurs do not think about it every day: selling or transferring the company. At an unexpected moment, however, this can suddenly appear. Because a special development takes place in the company or in the life of the entrepreneur, or because a potential buyer suddenly knocks on the door.
And then? Will you be ready?
Transferring a business is more than just handing over the keys. It is also emotionally difficult to transfer your "life project" to someone else. Therefore, it is important for all entrepreneurs to be well prepared and take thoughtful steps to future-proof your business.
In our services, we often use the 5-step model:
Step 1: Understanding your customers, products and services
Consider who your real customers are. Which customers buy from you the most? Are they also the "best customers," or is that often whining. Do you have a clear understanding of what your company's products and services are or is it always customized. Can you easily explain your product to a new employee?
Step 2: What are you making your money with now?
By performing a margin analysis (and keeping it up to date) you can gain insight into your gross margin. By this we mean the difference between the sales price and the purchase price. Operating expenses (such as personnel costs, housing, selling expenses, transportation, etc) are paid from this gross margin.
It is then particularly important to look at the margin development per product group and per customer type.
Step 3: Business structure
Does your company structure match your activities? This can be divided into 'internal' and 'external'. Internal refers to functions within your organization. If you have several employees, are the responsibilities well distributed? How is your 'span of control'? Can certain parts of the company be transferred to someone else?
For the external business structure, you can think about the legal business structure and the financing structure.
Step 4: Contracts in order
Do you have your agreements with customers, suppliers and staff fully written down? This is an element that sometimes remains somewhat underexposed. Of course you have an employment contract for your staff, but are all the important things in it?
In the event of a sale, it is very important to have on paper what agreements have been made and what they mean.
Step 5: What is my company worth now and how do I increase its value?
Everyone knows the rules of thumb of so many times EBITDA. But the value of a company depends on many factors and usually cannot be expressed in such a "simple" way. Once all the above questions have been answered and more insight has been gained into cash flows, you as an entrepreneur can start working on improvements and sailing more sharply downwind. The degree of certainty of cash flows and returns to be achieved largely determine the value of the company. Also called the 'earning capacity'.
Are you wondering about the future-proofing of your company? Or how you want to transfer or sell your company? Or how your company is ready for the new generation? Or how the continuity of your business is guaranteed?
Thinking about the future of your business at an early stage increases the chances of business success. You do not have to sell your company tomorrow, but you will be prepared for the future.
