As an entrepreneur, you generally don’t start with the end of your business in mind. Consequently, many entrepreneurs don’t really have a plan in this regard. But, there will come a time when you wish you had taken more account of this. For example, when you want to retire. Or when you are simply ready for a new challenge at some point. Selling a business is not something you just do on a lazy Sunday afternoon. Simply placing an ad on eBay and making a satisfactory sale is not an option. Preparing an optimal Europe business for sale trajectory takes up to three years in most cases. But what can you practically take into account on a daily basis?
Create SOPs
SOP is an English acronym and stands for Standard Operating Procedure. In a nutshell, this means that you document in detail all major activities and processes within your company. So that an outsider can relatively easily ‘step inside’ your company and, based on these manuals, continue to successfully run and hopefully expand the business.
Where many SME organisations are still lacking is that they are too dependent on the input of the founder/owner. Without his or her finger in the pie, everything actually collapses pretty quickly like a house of cards.
But even if you do not have an exit in mind, but simply want to remove yourself from the daily grind and grow your business, it is necessary to develop SOPs. This is indispensable for scaling your business. And scalable businesses also definitely do better with buyers.
Retaining valuable employees
The last thing a newbie owner wants is for talented employees to walk out the door right after the acquisition. Anyway, even if you are not going to sell your business in the short term, you want to retain valuable staff. One way to achieve this is by setting up a long-term remuneration structure, for instance by intertwining an increasing bonus with annual profit increases.
Don’t stop innovating and investing
Although it seems counterintuitive, when you have an upcoming planned sale, you don’t want to stop innovating and making the required investments to do so. You may think this will only cost a lot, and I am just planning to get out of the business. However, potential buyers see this differently. They want to buy a company that is prepared for the future. That is ready now to cash in on untapped opportunities in the market. By slacking on this front, you are actually causing your business to fall behind the competition, which will undoubtedly depress the selling price.
Give your business a facelift
They do say ‘Don’t judge a book by its cover’ but in practice, we humans do things differently, and it is no different from picking a company to buy. You only make a first impression once to add another cliché. Anyway, a lick of paint, revamped interior in reception, and so on, can do wonders for your company’s outward display. In case of an online businesses for sale, you might also consider a new website design. But this is also something you want to think about from time to time even when you are not yet planning to sell your business. After all, other stakeholders such as employees and customers, for them too, the eye wants something too.
Clearing tax and legal skeletons in the closet
This may go without saying, but no buyer wants to have a fight with the tax authorities or lawyers after an acquisition. You can assume that potential buyers will (have to) do their due diligence in this area as well. So you really want to have resolved any outstanding tax and legal issues as much as possible already. In any case, always be open and transparent!
Diverse customer base
Most buyers prefer not to see a company’s customer base consisting of just a handful of customers. Ideally, no single customer covers more than 10% of the turnover a company makes. If you think about it, this situation where a business is highly dependent on certain customers is never really a situation you should want or can be called healthy. One customer quits and the whole business takes a hit or worse means the end of the company in question.
Develop truly unique products or services
Buyers are also sceptical of companies that provide a product or service that is easily or already matched by competitors. ‘Commoditisation’ of supply is almost synonymous with price erosion. Admittedly, coming up with products and services that are difficult or virtually impossible to imitate by other entities is easier said than done. Hence the advice given earlier, ‘Don’t stop innovating and investing’. Innovating is a continuous process. Not something you do momentarily. It has to be in your company’s DNA as it were.
