How to Sell a Business – Building Value and Creating an Exit strategy
You need to plan ahead to sell a business – There are also ways you can increase your sale price but they must be planned and implemented gradually
Before you think about how to sell a business, you need to know how to derive the maximum sale price for your efforts.
Many business owners try to sell a business before it is ‘finished’, and as a result only receive a fraction of its true value. To avoid this, you need to know what your drivers of value are and start integrating them into your business gradually.
To create value, you need to create a business independent of you as the owner. Potential buyers want to buy a business that can be run without you. This means that other staff members need to be capable of running it.
Create Value through Delegation – and Sell a Business worth buying
One of the biggest concerns for anyone buying an existing business is that the success of that business comes down to some magic formula that only the owner knows about. Or that its success is down to a key figurehead and without that figurehead the business will crumble.
Once you’ve stepped back from the business and shown potential buyers that the business can function and thrive with or without you, the business will become even more valuable.
By creating solid systems within your business and having well-trained staff, you ensure that the new owners will fit comfortably in your business, and drive up the sale price as a result.
Creating an Exit Strategy
In order to sell a business successfully, you need to start delegating the responsibilities of the business to your employees so that when the time and business value is right, you can exit. This may be a physical exit where you continue to receive passive dividends, or a financial exit where the business is sold or a combination of the two.
Businesses are most often sold based on a multiple of past profit. Research similar businesses to yours – including their selling price and the multiple paid. Outline what the success factors for achieving the highest multiple are and start to build your business thinking around embedding these factors into your business.
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