You may judge right now is not the optimum time to be selling your business. That’s your call, and time (and President Trump) could yet prove you right. But if you have a long-term exit strategy, the sooner you start getting your business into good shape the better. Why? Because any enhancements you plan to put in place will then have time to bed down.
And once your improvements kick in, they will not only add value to your business, they will also earn you money. Remember too that making your enterprise more profitable will also make it more attractive to those future buyers — a situation with win-win written all over it.
Here are five things you can do to start your business upgrade:
1. Organize your paperwork and make sure your financials are in order
If your business is making money, and you can prove it, you can grab the attention of potential buyers. Getting things organized early means you can track your growth, show the impact of your fine tuning, develop scenarios to refine your options, and much more. Interested buyers will also want to understand how you have invested in the business, and what outcomes that produced.
In addition to the last point, everyone realizes that borrowing to expand — let’s say a California vineyard — is an economic reality. Just make sure your paperwork can show what you managed to achieve and be aware that a business hampered with various large debts is not really going to add much to its kerb-appeal at sale time.
2. Go on a long vacation
Why so? Because it’s cast-iron proof that your enterprise can survive and thrive without you. One thing a small business seller needs to steer clear of is any notion that you’re essential to the whole operation. And even if a buyer doesn’t really believe that, don’t give them the chance to drive down your business valuation on the mere suspicion you might be the only one pulling the strings.
That means you need a management team with key people who can be trusted to control the business by making good day-to-day decisions. It can take time to build a team able to fly the business without your help. But if you can put this measure in place, you’ll be pleasantly surprised how much it improves your sale prospects when that time comes around.
3. Update your machinery and make sure everything ticks over
With a sale somewhere over the horizon, now is a good time to invest in new machinery. Provided you invest wisely, state-of-the-art equipment can show your outfit is at the forefront of your sector.
If you’re in Colorado agriculture, for example, make sure any purchases will impact upon your outputs, perhaps by speeding up harvesting, improving the quality of the crop, reducing labor needs, and driving down costs.
Demonstrating you have efficient maintenance schedules in place, including a record of the costs and what has been done, is also a plus feature which can give buyers confidence that they have found a high-value listing.
4. Retrain your staff
You may be quite satisfied your people are doing a great job, but do your training records show you keep up to date with the retraining required? For instance, new products may demand new skills, new legislation may require updated procedures, and business expansion brings its own training needs.
In addition, you will want to show how you identify key staff and train them for advancement within the business. If your training plans show how you have invested in people, buyers will view this as yet another positive. And in the meantime, a well-trained workforce will positively influence your customers and thus your revenue.
5. Revise your business plan and offerings
Is your business plan a dynamic document with a strategic focus which you keep under review? Or just a tired set of platitudes you are always meaning to update? A forward-thinking business puts business planning at the center of its activities and is never afraid to revise plans which no longer work.
And when you consider introducing new products or similar innovations, good planning will show how these are to be resourced, what the projections say, and what criteria will be used to evaluate the outcomes. And once again, would-be buyers will be visibly impressed.
Bruce Hakutizwi is USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium-size businesses. Bruce has more than seven years’ experience working within the U.S. business transfer marketplace connecting buyers and sellers.
