What can you do now to prepare your business for sale next year or years down the road?
Here are three things I recommend you do now so you’ll be prepared to sell later.
1. Determine what your business is currently worth. Determine what your business is worth now. Industry associations or business intermediaries are good sources for the most common valuation methods. You can hire a valuation firm or a CPA experienced in your industry and type of business.
Gain an understanding of how companies in your industry and business category are valued by the marketplace.
2. Conduct a buyer’s audit. Look at your business as a buyer would look at it. What gives it value in a buyer’s eyes? Is it your management team? Is it your market share? Is it your location? Is it your customer list? What is it?
As a buyer, what major risks do you see that concern you?
Why buy your business instead of one of your competitors?
What is the least attractive aspect of buying your business?
If you could change three things to make it more attractive as an acquisition, what would you change during the next 12 months?
3. Reduce risks and enhance value. After identifying major risks and specific value elements, take action to eliminate risk and increase value. The more you do that, the more your company will be worth to a buyer and to you.
Don’t wait until you’re ready to sell to address these issues. Heck, you may never sell your business. But you want it to be worth more anyway, right?