Building a good company and building one to sell are parallel journeys. A good business, running well, is easier to sell than one that needs attention or effort to realise an exit.
If you start with the end in mind, then the foundations of a successful exit should be relatively straightforward and normal practice for many entrepreneurs. But this isn’t always the case and in some instances being too busy working in it forces you to lose sight of those tasks and activities that will allow you to grow, build and one day exit your company.
In this article, we’re going to deep-dive into the 3 key areas of building your business for sale.
- Building strong business foundations
- Delivering sustainable growth and profit
- Preparing to sell your business
Building strong business foundations
Many ventures fail in their first year. Others fail over time and many more fail to realise their fullest potential. There are many reasons why this can happen and many factors both in and out of your control.
Successful businesses often have similar traits and the most prominent is that they do the basic things increasingly well. These foundations allow the business to develop, grow and change as the business needs to on its journey.
Systems and processes are rarely sexy until they start affecting the bottom line. And they will, but not only that, they compound over time to benefit it forever.
If you dedicate time to setting processes and documenting each of them, they can be used time and time again for reference.
Setting up and maintaining good financial records, building robust teams and solid sales and marketing procedures are all the building blocks of a successful business and your focus as an entrepreneur or business owner is to ensure each of these is as strong as the next.
Delivering sustainable growth and profit
As your organisation grows your focus should be on delivering those products and services that help to consistently build revenue and profit. These activities drive growth and this is attractive to future buyers.
But this is not an easy journey and some years will be harder than others. Building efficiency and focusing on growing but sustainable profitability is key.
At certain points, you might overstaff on your journey, and at others, sales might be harder to achieve, but by building a plan for growth and acting upon it, then you will be in a better position to tackle these challenges and opportunities head-on.
Back in 2015, I wrote a vision document for my business. It detailed our plans and ambitions for the next 5 years. Many times over this period we went “off-piste”, but when we did, we were always able to go back to the plan and refocus our efforts. Looking back at it, we were incredibly close to the final goal, but the journey looked a lot different to our expectations.
Delivering continued growth is a huge challenge for businesses. Sometimes it’s hard to decide which course of action to take and determine the opportunity cost of our decisions.
This is exactly the type of project we can help with at Move at Pace. Some of our clients have built strong profitable companies, but the team around them is wholly reliant on their efforts to sustain this. Our goal is to help realign the business with systems, and processes and help place the team that will deliver continued growth.
Preparing to sell your business
There are many business exit plans and each of these requires different strategies to achieve the desired outcome. The good news is that many of the steps to a successful exit strategy are somewhat similar, if not the same.
Selling your business is hard and only a small percentage actually realise full value when it comes time to sell.
With many entrepreneurs telling us that “their business is their pension” this means they don’t just want to sell it someday, they need to. But that won’t happen by chance and it won’t allow them full value if they don’t adequately prepare for it.
No matter what exit strategy you choose to pursue, having your business in a sale-ready position is key.
Look at each function or department. Is it running well? Where are the weaknesses and what would happen if you weren’t there to answer questions? Are your accounts in good order? Are your staff contracts up to date?
Some of these questions may be laughable to you, but I promise many businesses if they are truthful, don’t have their business in an exit-ready position. And when they come to sell, a spotlight is rarely shone on the strong parts, but rather on those that need work and attention.
Any areas that do need work increase the time taken to complete a sale, reduce the likelihood of it happening and possibly reduce the total value you could receive for completing it.
It’s easier to sell a good business. They also command a higher value at exit.
Starting from day 1 you can prepare your business for sale and it’s never too early to consider this. By focusing on the foundations, delivering consistent growth and sustainable profit and adequately preparing for exit, you give yourself the best chance of completing your ideal exit.
No matter what the reason for selling your business is, the team at Move at Pace can help at each of these stages.
We work with start-ups and entrepreneurs to ensure the foundations of your business are solid. We work with growing businesses helping them with sales, marketing and operational functions to ensure they have strong growth potential and the team to support this growth is planned, in advance of needing it.
Finally, we support those entrepreneurs who are preparing for exit. Whether they are in the process of selling or want to plan an exit in the next 1-5 years, we work with them to set their business on the right path to achieve these goals.
If you want to explore the options to work with the Move at Pace team during any stage of your business, please book a free 30-minute discovery call with one of our advisors.
And don’t forget to check out the Move at Pace YouTube Channel.