There are many reasons to build a business, but if you’re building to sell, it’s easy to focus on the wrong thing. Do it the right way from the start, and things will pay off in the long run! Let’s dive into some tips that can help you prepare to sell a business.
Ryan Tansom’s success story is inspiring, and starts simply: Ryan’s father owned a failing copier business. It suffered from an absent owner, among many other issues.
With his background in sales, Ryan took over his father’s company and turned it around. He managed to grow the company quickly with a fresh mindset and drive, and used many different tactics to build the business up to the point where it could be sold for a profit.
Ryan replaced 70% of the existing staff. He implemented a new document-management system and invested in IT so the company could thrive in the B2B sphere. He also rebranded the company to give it new life.
Business started to pick up fast, and the company reached new heights.
Once the word got out that it was for sale, it didn’t take long to receive offers from the biggest players in the area.
Ryan Tansom didn’t go into the family business to build it up and sell it, but the company ended up being such an attractive asset that selling it was a no brainer.
The thing is, creating a business that you can sell is not always easy. Being profitable is not always enough. So, here are some tips you can use to see where your business stands. Here’s how you can generate more profit, while also creating a stable and attractive asset that can reel in impressive offers.
Business Building Tip #1 – Understand the 10 Ways You Can Increase Value
Increasing a company’s value depends on many factors. Creating a business you can sell requires understanding the things that raise its value. It means looking beyond profits. These things will make your business an attractive proposition:
- Systematized and well-documented business processes
- Dependable income sources, especially repeat clients
- Enough premium clients, even in tough times, to ensure the quality of services
- Unique products and services
- A business that remains successful, even without the owner’s input or key employees
- Demonstrated ability to generate leads and sales that don’t depend on word of mouth
- A well-constructed strategic growth plan
- Show constant monitoring of KPIs, preferably monthly assessments
- Be able to generate more than 30% of revenue from less than 10% of your clients
- Increase your market value and position with respect to your direct competitors
Maybe you’re familiar with some of these principles. They’re some of the best business building tips you can find… And you won’t get far if you don’t use all the methods at your disposal to increase your company’s value.
Business Building Tip #2 – Have a Strategic Marketing Plan
Coming up with a basic marketing plan is fairly simple: set your revenue goals and list the actions you’ll take to get there. Many businesses do this, and there’s nothing inherently wrong with it… But it’s not the optimal approach – and certainly not strategic.
A strategic marketing plan is easy to create if you reverse engineer your vision for your company. This means thinking of how you want your business to look and how much you want to make.
But don’t put down any numbers just yet.
Instead, create a spreadsheet and approach your revenue goals month by month. This is especially important when selling a business that’s seasonal. Some months will be more lucrative than others.
You should also take the previous year into account. Base current projections on the previous year’s earnings, meaning your year-on-year comparison for every month.
Many other elements are essential to a strategic marketing plan… Once you determine how much you want to make, it’s time to figure out those other aspects. Reverse engineer your vision, based on projections, to find out how many sales leads your company needs. Determine the frequency of strategy sessions, how many proposals you send out, and so on.
A strategic marketing plan prepares your company and your decision-making for difficult situations. It also helps everyone stay focused on the most critical objectives. It can help a company remain stable and future-proof, increasing the company’s value in a negotiation.
Business Building Tip #3 – Don’t Assume You Can Do It Alone
One of the most essential business building tips is to avoid taking the lonely road. It can be challenging to build a business (at least a highly successful one) without help.
Hire the right advisors to guide you, or rely on the advisors you already have. Business coaching lessons are always an excellent way to start. You can also benefit from turning to business brokers – most of them have an expert understanding of mergers and acquisitions. They can often tell you exactly what your business needs to increase its value.
Even better, a business intermediary can help you find the right buyer. Just keep in mind that this kind of help doesn’t come cheap… But it may be necessary if you want to build an attractive asset that will sell for seven or eight figures.
Business Building Tip #4 – Don’t Put Your Eggs in Somebody Else’s Basket
During MySpace’s rise to prominence, many service providers profited off the company’s back. The most common way to make money on MySpace was by creating page backgrounds. It was very lucrative for a while – until MySpace stopped being relevant.
You can probably guess what happened. Most of those companies went belly up because they offered nothing else. They put all their eggs in the MySpace basket. This is something that still happens today when companies rely on a few providers or distributors for growth.
So here’s a business building tip you can take to the bank, whether you want to sell or not: never depend too much on other businesses. It’s along the same lines as not depending too much on the owner or key employees for success.
To build a valuable business, you need to make sure that its adaptable to various market conditions. Always have a backup plan and regularly interview or research prospective partners. Even companies that seem infallible can fail. Just look at Polaroid, Nokia, and other similar examples.
Selling a business is easy when it is successful, attractive, and profitable. All of these factors and more determine your business’s real value. To walk away a winner from the negotiation, you need to touch on the key elements of your business. Make sure that everything looks exciting to the buyer, and adjust whatever needs adjusting!