Going through the business sales process can be stressful and emotional. It can be easy to get overwhelmed.
You can also end up getting distracted by big questions about what you might do next. But, as you prepare for the potential sale of your business, it’s important that you remain focused, disciplined, and organised.
At this stage in your business journey, small mistakes can make a big difference to the eventual sale value of your company. So, as you start to prepare for the grueling process of selling your business, keep these tips and ideas in mind.
1. Strip out unnecessary costs
We’ll start with the most obvious tip: the value of your business will, usually, be a direct result of your underlying profit or revenues. Of course, if you’re focused on a sale in the next 12 to 18 months, it can be difficult to increase you top-line revenue through extra sales.
Instead, you should look at your costs carefully. In the good times, you may have added unnecessary costs, such as service providers, consultants, or even employees, that may not be strictly necessary. If you were going to continue to own the business, you might have been happy to absorb these costs.
But as you prepare to exit every extra pound that you can save will lead to an increase in your ultimate sale value. Now is to the time to get disciplined, and strip out any extra costs where you can see it might boost your profits.
2. Raise the profile on your executives
Now for a less obvious suggestion: there is good evidence that companies led by well-known and well-respected leadership teams command a premium on their valuation.
On reflection, this should not be too surprising: would you rather invest in a business founded by a well-known, highly successful billionaire, or someone that you have never heard of before? Clearly the former. The fact that they have a profile and track-record gives them additional credibility that lifts the value of the business.
There are a number of specialist companies that focus on just this field of work, which is generally called executive positioning or CEO profiling. A usual plan will comprise getting your leadership into the media as well as building their presence on social media.
3. Generate as much interest as possible
Another good way to boost the sale price of your business is to create a bidding war for your company. In practice, this is where multiple parties are competing to buy your business. You don’t want to be left in a place where you have only one interested party, and you feel forced to accept a low-ball offer.
However, many smaller businesses settle for selling themselves to the first company that reaches out to them. While the first offer can be flattering, don’t be tempted to sell your company to them just because they were the first people to get in contact.
The best way is generate widespread interest is to engage a specialist company, usually called a broker, whose specialism it is to identify all the potential buyers of your company and reach out to them directly to solicit offers.
These experts will not only identify the obvious buyers, such as competitors, but less obvious buyers too, like suppliers, providers of allied services, and independent investors.
4. Launch new products and divisions
While it might not be possible to ramp up your sales easily within 12 months, you can still tease a potential buyer with the growth potential of new products and services.
For example, you could launch a new pilot product or service. Then, when you speak with a potential buyer, you can tease them with the explosive potential: “We have also just launched this new product, and while we haven’t brought it market properly yet, we think the eventual buyer of the business can drive rapid growth of this new product after sale.”
This is a long way of saying: potential buyers of your business are not just buying the business for its current customers and revenues, but they will be excited by the growth potential as well. If you pilot some new products and services, this is way to demonstrate the huge growth potential of the business to buyers.
5. Refine your brand
The sale value of your business is not only in your revenues, products, and services: the buyer is also purchasing your brand, and if you have a strong, well-known, well-positioned brand within you sector, that can be worth a lot to a buyers, especially if they want to move into your industry for the very first time.
As a result, in advance of selling your business, you might want to consider updating your brand to make it look more modern, fresher, and up-to-date. A brand refresh update can be costly, but it can add a significant multiple on the value of your business if you get it done right.
As you start to think about selling your business and the path ahead, the general lesson to keep in mind is: make sure your finances look as good as possible, shore up the strength of your brand, and, finally, ensure that you have left some growth on the table for the buyer.
The process can be tiring and exhausting, but, ultimately, if you get it right, it can benefit you for the rest of your life.
