It’s the entrepreneurial dream: you spend a few years building your business into a success, and then you turn around and sell your business for a large profit. Sounds great, right?
But to fulfill this entrepreneurial dream, you need to know how to set your business up to be sold. Otherwise, you either won’t be able to sell it at all successfully or if you do, you’ll get much less for the sale.So today, we’ll talk about how to set your business up to be sold…
Remove Yourself from the Business
This is the biggest key when it comes to selling your business.If you’re an integral part of the business, then the business won’t be able to function without you. And if you’re business can’t function without you, then you won’t be able to sell it!If the business is largely based on your personal brand, it can be a bit harder to remove yourself from it. However, you can still do it.For example, if it’s a blog, you can slowly bring in more and more guest contributors, to the point where you only post a couple of times a month. At that point, the blog won’t need you to sustain itself.If it’s a more traditional type of business, you can bring in people to do your daily tasks and make decisions, to the point where you can step back, and the business won’t suffer at all.
Take Care of the Paperwork
You’ll want to keep your paperwork and financials tight in the years preceding the potential sale.That means you should have accurate profit and loss statements, balance sheets, tax returns, expenses, inventories, etc.An outside person should be able to pick up your financials and have a crystal clear idea of where your business stands.If there’s any doubt or haziness at all, and can cause hesitation on the buyer’s part.
Know the Value
Do research on your industry and know how companies in your industry are evaluated.Some industries use multiples of monthly or yearly profit, while other use different benchmarks.This valuation knowledge will help you determine what you need to focus on most in the business. It’ll give you the key metrics to optimize to sell the business at the highest possible price.
Find Your Broker (Or Your Buyer)
You can opt to locate the buyer on your own, but it’s usually easier to find a broker. A good broker will get you the best deals because they’ll want to maximize the commissions for themselves.If you opt to find a buyer on your own (which can sometimes happen if you’re looking to sell to friends or family), a broker may not be necessary.
Create Financial Projections
What’s the expected potential of your business for the next three years?You should put together financial projections for revenues, profits, expenses, etc. That way, a potential buyer knows exactly what they’re getting into.And it’s a bonus if you can meet and beat those projections for the first few years before you try and sell.
Wrapping Up How to Set Your Business Up to Be Sold…
Cashing out on your business is the entrepreneurial dream – but it’s easier said than done.You should run your business with the potential sale in mind. That way, when it’s time to sell, you’re fully prepared to do so. These strategies will help you sell your business.