Selling your business can change your life. Moving onto your next challenge, safe in the knowledge that your clients and team are looked after, is an exciting prospect that has likely crossed the minds of many small business owners.
When you’re ready to do it, you’ll want to move swiftly, but plenty of factors can hold you back. A slow market, more sellers than buyers or uncertainty are some you can’t control, but there are five in particular that you can.
From first-hand experience of this process, here are five ways to make your small business sale-ready.
Build a brand bigger than you
Average businesses achieve a sale price based on a multiple of profit. Great brands set their own price. If your business has strengths beyond its balance sheet, you’ll stand out for the right reasons. A solid online presence, including an impressive first page of Google, and a sterling reputation with countless loyal customers show a buyer there’s huge potential for growth, which is probably why they’ll be buying you.
However, the brand shouldn’t be tied too heavily to one individual. If you’re the face of your business, consider bringing others into the mix. When I first started my social media agency, it was just me. I met prospects and spoke at events and did all the work myself. It was The Jodie Show. I realised this would be a barrier to growth, because I could only be in one place at once, so I encouraged other team members to take the limelight when they were comfortable to. David expertly ran the webinars, Joanna and Joe conscientiously looked after the clients, and I was no longer the sole face of the brand.
Create process manuals
It seems paradoxical that creativity requires routine, but it does. Game-changing ideas and breakthrough experiments come out of order, not disorder. A clutter-free existence gives space from which to think and your business is no different. Don’t leave exceptional service to chance. Don’t leave any aspect of your business to ad hoc decisions. Case-by-case does not scale and most of what happens in your business already follows a process. If the process is only in the minds of you or your team, there’s a problem.
Create manuals for every aspect of running your business. From how you answer the phone to how you create proposals or update your website. From what happens during the week after Christmas to how you create an email campaign or interview a new hire. Take every single process and create a standard operating procedure (SOP). Share them with your team and ask for feedback. Make these documents the baseline of your work and improve them regularly. Create a well-oiled machine that someone would be lucky to own.
Ensure the slick processes extend to the due diligence and the sale completion. Be a dream to work with by preparing the required information ahead of schedule. It reminds the buyer why they are buying you and reduces the risk of your deal falling through due to paperwork.
Identify the tacit knowledge
An unquantifiable asset of any company is the knowledge stored safely inside the heads of its team. It stays there until it’s needed for a specific question or situation. The problem is, you might not realise how much of it is there and it can’t be bought. If daily puzzles require a knack to solve, there’s tacit knowledge around. Making a business sale-ready means finding it and sharing it. Teaching everyone the tricks. Upskilling in every single area.
If you’ve been the head of your business since its inception, you’ll have astonishing tacit knowledge on how things work. Trouble is, that can scare a buyer. They’ll wonder what will fall down once you’re not around. Make yourself surplus to requirements by keeping a record of every time you answer a question or teach something. Whenever you overcome an obstacle that others hadn’t, or spot something they missed, write it down. Take the knowledge out of your head and into a document that is widely shared.
Make everyone a leader
My vision for a brilliant company is one where every single employee is a leader. Although they might not have a C-suite title or be head of a department, they take ownership of their role and responsibilities and take pride in delivering their best work. Like a true leader, they aren’t afraid of asking for help or a second opinion; they’re not precious or defensive. Teams full of leaders outperform those full of followers.
What’s more, acquirers want team members to take ownership of their roles beyond a transition phase, to help take the business to new heights without waiting around for instructions. Buyers want more than numbers and products; they’re looking to buy great people who can adapt exceptionally to a new vision.
Team members who need babysitting are not conducive to a saleable business. The same work takes twice the manpower and standards will be slipping without you realising. Signs won’t be spotted, issues won’t be resolved and quality will slip through their hands like sand. Identify your weakest links and relentlessly improve them. Turn each member into a leader and start with the furthest away. Train, develop, empower. Push your people to outdo themselves and see what they are capable of.
Know what you want
Before you meet with any buyer, know what kind of deal you’d accept. What does a successful acquisition look like? Perhaps you have a number in mind but you’re flexible on staying around during an earnout. Perhaps you want to escape as quickly as possible. Perhaps you want to free up cash or perhaps you’re looking for growth and you’ll take a share buyout. Do some valuations and play around with your options.
Develop a clear understanding of what you want, what you don’t want, and what’s in it for the buying party. The more you believe in your business the more you will believe that someone else would be lucky to own it. Do not be desperate to leave. Indifference is a cool hand and the more you know what you want from a deal the more you can state your terms and leave them for consideration. The strongest negotiation positions are held by those who can walk away. Be happy to stay but ready to go.
Create your robust stance and make your business sale-ready by producing process manuals, growing a team of leaders who represent your brand and not being the blocker to the business’ growth. Build a brand that you’re proud to own and buyers will be lining up to own it too.
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