How To Grow Your Business
Every business owner should always be thinking about the future and the day they plan to sell their business for more than it is worth. The way to do this is to continually work on your business and not in your business.
There are millions of baby boomers planning to retire but unfortunately, the majority will not be able to sell their business for what they need to enter the next chapter of their lives. Many will end up selling for pennies on the dollar, closing their doors or filing for bankruptcy.
Selling your business is a complex process.
Don’t rush into it and accept less than you deserve. Michelle Seiler Tucker and her team of m&a advisors have prepared a list of tips to help you build your business to sell for millions.
1. Get The Right People
Do you have the right team in place? Keep in mind that buyers want a business, not a job. The key is to make sure your business operates under a strong management team.
No man is an island, and a business is a machine. One single person cannot be expected to make all the individual parts work together. Each has to hold its own.
Ask yourself if your business is strong enough to sustain itself if you leave for a couple of days, weeks, months, or indefinitely. If the answer is yes, then you are on the right track to selling for maximum value.
I cannot stress the importance of having intelligent, loyal, and hardworking employees. Your team will be crucial to building your company’s value.
2. Evaluate Your Assets
The next step towards building a business to sell for millions is to analyze what your business has of value. One of the most valuable assets your company can have isn’t your property or equipment – it’s your brand name.
Maximize your company’s value by developing your brand presence and be sure to work hard at generating brand awareness so that you can have global exposure, which further motivates people to go out of their way to purchase your goods or services.
The bigger your brand, the bigger the price tag. Take Coca-Cola for example. Their brand alone (no product included) is worth a whopping $1 billion dollars! Does your product have a niche or intellectual property?
Maximize leads and prospects through good marketing and networking techniques. Go to conventions, trade shows, and conferences. Stay informed within your industry so that you can be sure you are on top of the latest and greatest industry standards.
3. Have Structured Processes
Another essential thing to focus on is streamlining your business processes. Good processes are the deadbolt lock to a buyer’s heart.
Are your operations efficient or do they need to be optimized?
Your business must have a structured automation system in place because even after you are gone, the show must go on!
Businesses that operate efficiently are naturally cutting costs, saving time, and capitalizing on their operations with better profits. It’s as simple and as complicated as that. Buyers are ultimately seeking out a business that is automated and that can structurally operate as independently as possible without them.
Additionally, if the business is in a nice market or contains intellectual property, such as database assets, these can often be monetized in multiple ways.
Database assets are why Facebook paid billions for Instagram & Whatsapp. Capitalizing on database assets and capitalizing or fixing automation processes in place within a company is typically how I obtain a 20% to 30% higher selling price for my clients.
4. Work On Your Business, Not For It
8 out of 10 businesses don’t sell because the owner works in the business instead of on the business. Try not to run personal expenses through your company. In the long run you are decreasing your company’s value by doing so.
Know your profit margin and manage your overhead. Are you operating at the highest profit margin for your specific industry?
If yes, then when the day comes to sell your business, your business will be ever the more valuable. It is not worth it in the long haul to mix and match your expenses between your personal and professional life. Trust me.
5. Timing Is Key
Do not assume it is time to sell because you feel that your business has a lot of potential.
Potential is always misunderstood. Yes, it is essential to the building process, but people looking to buy do not pay for potential.
Potential matters, but it is vastly overvalued by sellers. Most buyers pay for performance and profits, not potential. Even the few buyers that will pay for potential rarely pay much.
People pay for assets such as real estate, equipment, IP, database, software & hardware, etc.; so focus on the present reality, but do keep the future one in mind. Just don’t get lost in the daydream.
Real Life Build To Sell Example
Initial Company Value: $500,000
Business Problem: looking to sell, because they felt that they did not possess the business acumen to grow their company.
Potential Point: turning down 6,000 clients a year because they did not have the resources to meet the client demand
Selling Problem: the selling price was not enough for the owners to enter the next phase of their lives. If I would have let them sell right then and there, the two owners would have had to become employees after being employers for over 20 years!
Selling Solution: hold, grow, then sell and go through a partnership that enabled them to hire 10 new employees, rent a 5,500 SF building, hired 18 employees, leased new vehicles, equipment and software, and obtain additional software and hardware for their increasing number of projects and their client base
Time Frame: 5 years
End Game: On track to sell for $15 million
WHY: to leave a legacy for their daughter
Start Growing Your Company!
Follow my advice and you’ll be creating a business that works for you, rather than you working for it.
ALWAYS Identify WHY you want to sell your business first, plan your end game second, and then reverse engineer it in order to obtain the ultimate selling value on your business.
We help clients determine if they should sell and go, or hold and grow, then sell and go. In order to identify what is best for a client, my firm always evaluates the 6 P’s: People, Product, Process, Process, Proprietary, Profits & Patrons.