The core aim of any business is to make profits. Regardless of the industry, your business is in; your ultimate goal is to ensure that you have a higher Return on Investment.
But did you know that there are entrepreneurs who build businesses intending to sell them at a profit?
If you are one such entrepreneur, you must be wondering how to sell your business at the right price. Well, just like building a business, selling one can be quite overwhelming. It requires firsthand knowledge of all the dynamics involved and a clear understanding of the selling process.
Remember that building a business requires a lot of time, effort, and resources. As such, when it’s time to sell, your sole objective should be to get maximum value for your business.
However, to do this, you should assess the steps you will take to ensure that your business’s sale runs smoothly.
Selling Your Business in The Proper Way
Selling a business is not a walk in the park. You need to treat your transition the same way you treated your growth strategy. If you don’t, you risk causing unnecessary tension and risks between your personal account and your business.
According to recent statistics, close to 30% of businesses on sale get the right buyers. The remaining 70% consists of businesses (mostly small businesses) that fail to sell because the owners tie all their assets and finances to the business.
When you tie all your finances to your businesses, potential businesses will get the impression that your business is high risk. This will not only give your business a bad image but will scare away any potential buyers. However, with ample planning, you can get a deal that suits you and the buyer.
While this is utterly important, you should be wondering, “how can I sell my business?” Well, to give you a definite answer, here are a few pointers to help you out.
1. Develop A Recurring Revenue System
One of the fundamentals things to do in a bid to sell your business at the right price is to develop recurring revenue. But what is recurring revenue? Ideally, this is revenue that is not only predictable but is expected to run into the foreseeable future.
Basically, this technique ensures that your business continues to make money without your presence. Additionally, recurring revenue enables your business to create an annuity-based subscription as well as subscription-based revenue. This way, your business won’t solely rely on your personal salesmanship to succeed.
But why should you develop this system while you are looking to sell the business? You might be wondering. For starters, it gives the impression that your business has minimal risks, which might mean that your ROI is way higher.
Secondly, potential buyers love to buy businesses that are already well established. They want to pay for a business that will not require more resources to make a profit. Having this system in place will convince possible buyers that your business will continue to make money, even after you complete the sale.
Finally, having this system in place is a foolproof way to ensure that you capitalize on your sale. Since such a system is an asset to your business, you stand to get your business’s best price.
2. Identify The Ideal Buyer
Identifying a strategic buyer is another crucial thing to do. Otherwise, you won’t get the best price for your business.
Typically, there are two types of business buyers. The first are financial buyers. Such buyers buy your business, including your future profit expectations. While these buyers may be alluring and convincing, they are not the ideal buyers.
The second type of buyer is strategic buyers. This type of buyer will be looking to buy your business for the sole purpose of improving their own businesses. While strategic buyers may not pay the optimal price, they are ideal buyers. This is because a strategic buyer will offer the best value for money for your business.
Remember that depending on the nature of your intentions, a strategic buyer can utilize his company’s resources to optimize different attributes of your business. This way, you will be receiving some revenue from every sale they make, regardless of whether you sold the business. It’s a smart play when selling your company.
3. Consider Your Personnel
Regardless of the state of your business, you can remain assured that your personnel matters. Once you leave the business, it must continue running smoothly, and your personnel are the only people to help do that.
Since your workforce is an asset, their skills and experience will count in the cost of selling your business. Therefore, it’s essential to employ or train workers who are not only good at their job but effective as well. A well-trained workforce will help you to sell your business for a higher price.