As a serial entrepreneur, business consultant, and author I have seen many corporations come and go. Success in any business endeavor means you as the owner must have concrete objectives in place that lead to an exit strategy your core team is aware of. Most company’s business plans may cover five or more years of operations strategy while neglecting goals that can increase their scale thereby leveraging them for profitable mergers and acquisitions. If you want your business to succeed, focus on creating a company that can withstand the valuation process and sell profitably.
Mergers, acquisitions, and corporate restructuring occur every day for a variety of reasons and have become the norm of doing business. The choice to sell your business may be one of the most important financial decisions you will ever make. Scaling for growth is about considering capacity and capability while determining whether your systems, technology, infrastructure or team can accommodate internal advancements or identifying whether third parties must be engaged to handle incorporating more efficiency in your company’s logistical functions.
The ultimate objective behind building your business to sell is to create a cycle of continuous, data-driven improvement focusing specifically on your customer or client experiences. When a business is sold, what buyers usually purchase are repeatable systems, people, skills, and databases. Here I’d like to share key questions that owners should consider, analyze or incorporate into their business model immediately:
Is my core team clear on the company’s core values?
Values guide the norms and behaviors of staff and they, in turn, permeate these principles to customers and clients. Be clear that your team members embrace the company’s culture and are motivated by the overall vision and mission as that enhances productivity thus contributing to an increase in profits.
Does your company have repeatable systems?
Repeatable systems are tried and tested formulas being implemented that reflect your brands’ adaptability to change. An effective repeatable system is one that merges customer and employee feedback to incorporate innovations and improvements quickly while eliminating external threats like direct competition. Another one may be a tracking portal that reorders inventory from a supplier when the product is at a certain threshold. Any system your company incorporates to make data management easier almost always makes a company attractive for purchase.
Does my company have an easily understood differentiation from similar businesses?
There is nothing wrong with creating a quality product or service in a well-established market as it will be much easier to land sales. Be crystal clear early on regarding your distinct point of difference to remain at a vantage point against competitors. Remember, it’s not about adapting to fad, but being responsive to changes without compromising the mission.
Do we keep accurate thorough financials?
Financial statements are a barometer of your company’s success. Keeping track of these statements aid with itemizing your income, cash flow, capital expenditures, balance sheets, and more. These statements determine if you can secure lines of credit, calculate how much taxes you will pay or can reduce, eliminate mistakes in calculations, and build trust with vendors, lenders, and ultimately investors.
Does my company depend too much on one person or one function?
You need to immediately consider if you have one employee who handles multiple vital activities in the company especially if you have more than ten employees and assign those duties to qualifying parties. As well, review your vendors to make sure that your goods aren’t all coming from one source with backups in place ready to produce if required. Also, evaluate whether output expectations can be streamlined to maximize outputs in case of technological restraints.
There are many factors to consider when preparing your business whether a startup or existing for a profitable sell. For more than 20 years I have worked exclusively with small, medium, and large business owners helping them to not just take care of their bookkeeping, payroll, taxes, financial planning, and financial statements, but directly assisting with the development plan that prepares the business for profitable purchase when required. No two businesses have the same financial reporting and as a business owner I understand how sending out invoices, making payroll, and paying bills take precedence in day to day functions while reviewing, analyzing, and reconciling ongoing business strategies and financials can easily get pushed aside. I review the variables helping you or your team decide what’s best for your business moving forward as having access to accurate, organized financial data is critical for making a maximum profit on your business’ sales transaction.
Reach out to me at JeffreyLevine.Solutions to discuss your company’s objectives to build your business to sell.
Jeffrey Levine, Tax Planner