You’ve created your business from the ground up – built it from dreams and nurtured it until it began to flourish. Starting with just an idea, businesses are built brick by brick out of the creativity and skill of an entrepreneur and cradled from dream to reality.
However, every dream eventually comes to an end, whether that’s because of a change in priorities, a decision to retire, or the yearning to create yet another business. The right preparation is important to making this transition a positive experience – not the terror of logistics and headaches of failed sales it could turn into.
Succeed through Proper Planning, People, and Process
With the proper planning, people, and processes, selling your business can be a rewarding experience that will help you move into the next stage of life seamlessly. But not everyone is a serial entrepreneur with experience selling businesses. In fact for most people, they’re selling their business for the first time.
That’s where Bayview Financial steps in. We’ve walked many business owners through the sale of their businesses, helping them realize great financial success through succession.
Below you’ll find the tips we give to every entrepreneur looking to sell their business.
1. Give Yourself Time
To nurture a seamless selling process
The more time you have to sell your business, the better off you are. From beginning to end, it can take up to five years to get through the process. That’s long enough for a child to go from crib to kindergarten. Now, life doesn’t always allow you five years, and it can be done in less time, but unless you’re forced to sell quickly by external forces you have no control over, giving yourself as much time as possible will give you the greatest chance of crafting a seamless succession.
As a business owner, you need to be constantly looking to the future with clear eyes. Once you get a glimpse of even the idea of selling, you should begin to prepare, and seek out those experienced in business succession.
2. Craft an Intelligent Plan
To maximize company valuation
You’re looking ahead, and you see that glimmer somewhere in the future that you might want to eventually step to the side. Now you have plenty of time to sell, and that starts with creating a well-crafted, thoroughly thought out plan.
Because good planning enables you to get a good price for your business.
But before you make you plan, you need to know what to plan for. Below are the areas we encourage all our clients to plan for:
- Automate – It’s hard to sell a business when you’re the centrepiece of the puzzle, because the buyer doesn’t know what will happen when you’re removed. So, the best thing to do is to start taking yourself out of consideration early. The less involved you are, and the more automated the daily processes, the easier the buyer can see a future for the company without you.
- Look to (the business’s) future – You may be looking at a future without your business, but buyers are looking at the future of the business. No one knows what that will look like better than you. So, while you may not be as concerned about where the business will be ten or twenty years down the line, if you create a realistic and successful plan, you’ll show buyers the greatest possibilities your business can achieve.
- Identify the ideal buyer – Do you want someone internal to take over, or are you looking for an external buyer? Do you want an experienced business owner, or someone new who’s ready to make waves? Each of those buyers wants something different from a business. Just like you want to position your product in a way that will entice customers to buy it, you want to position your company in a way that’s most intriguing to your ideal buyer.
- Ensure clear accounting – No one wants to buy a mess of numbers they can’t parse. The clearer picture you can give to prospective buyers, the better the chance they’ll buy in. Opaque numbers only cause fear and annoyance in prospective buyers, and that’s the last thing you want before a sale.
- Be upfront – Instead of trying to cover up any problems, march them out in front of buyers. By being the first to identify prospective problems, it gives you the ability to frame them – presenting them as simple hurdles for the business along with possible solutions to each one.
- Know when to fold ‘em – It’s just like Kenny Rogers said. Set your basement price before you talk to anybody so that you know when to walk away, and when to run on to the next potential buyer. Don’t settle for just any price on a business you’ve worked hard to grow.
3. Get Guidance from the Experts
To deal with all the fine print and red tape
It can be tempting to go it on your own. After all, every person you don’t hire is another dollar in your pocket. Or at least that’s what it can seem like. The truth is that a good team will more than pay for themselves by helping you effectively deal with every problem that comes your way – from getting the right price to all the other legalities and fineprint that can hassle you throughout the sale.
You know your strengths and weaknesses, and what you need in a team. But for our clients, we recommend a(n):
- Accounting Firm
- Legal Firm
- Financial Planner
- Business Broker
The more diverse your team is, the better off you are for dealing with everything that comes up. Generalists can be useful, but a team that can pull from their diverse experiences is the perfect way to tackle selling your business.
4. Communicate Your Wants/Needs
To attain your best case scenario
If you don’t know what you want, then you can’t communicate that to your team, or your buyers – and then it’s guaranteed that you won’t get it. This is something people often hand-wave away, thinking they know (more or less) what they want. However, if you can’t articulate exactly what your desires (and your needs) are, then you don’t really know – you’re waiting for someone to tell you. And a buyer will be happy to tell you what you want, because it will cover their needs first.
Instead, be proactive. Sit down and really think about it. This is your business, and your future so don’t let anyone else set the terms.
- Your future plans
- The value of your business, and what you want to sell it for
- Your preferred method of payment
- Your preferred method of transition
By knowing what you want, you won’t be tempted to simply sell to the first business person who shows interest.
Continue Your Legacy through Successful Succession
You took the time to build your business from the ground up, pouring hours of your time and endless amounts of energy into it. Don’t allow the end to be anticlimactic. This is your time to let the world know what you’ve created. Successfully done, you will find a buyer that can see your vision, and how far you’ve brought your business, and buy in, knowing they can keep building the business to even greater success.
This isn’t the end – it’s the climax of this particular story. You get to profit, and, properly sold, you get to watch your business continue to grow and get stronger while you sip margaritas poolside, or dive into yet another startup.