As all businesses will eventually be sold, whether in 2 years, 5 years, or 30 years, business saleability is important. Business saleability will maximise the number of buyers interested in your business, and also maximise the eventual sale price received. The big thing to remember when selling a business is if it is not valuable to you, it won’t be valuable to anyone else either.
Strategies to improve business saleability include:
- Make sure your business has a decent profile and everyone is talking about it.
- Be realistic about the business and don’t kid yourself about your business’s weaknesses or value.
- Keep good accounting records – Most buyers won’t even look at a business with poor records as they have nothing concrete to base their decision on.
- Good financial performance – Most companies are valued on how much they sell and, even more importantly, how much profit they make.
- Fast growth potential – Investors are trying to buy something that has the ability to scale.
- Reduce overdependence on any one client, segment, or industry.
- Reduce cash flow needs – Companies that can finance their own growth internally are very attractive.
- Focus on customers generating recurring revenue.
- Have a unique value proposition – This is a competitive advantage and provides premium pricing and barriers to entry.
- Strengthen the management team – Buyers wants to invest in a company, not an entrepreneur.
Author Bo Burlingham in his book Finish Big surveyed dozens of entrepreneurs who had exited their business and found that about half were happy at the end of the process and half were miserable. One of the key factors in determining how satisfied they were had to do with their success, or lack of success, in building a saleable business.