One of the most rewarding aspects of starting and growing a business is being able to sell it for a handsome profit at some point down the line. It is a true mark of success when the founders of a business manage to sell it off for millions of dollars and can retire from working altogether if they so desire. Of course, getting to that point is far from easy. In most cases, it takes years of blood, sweat, and tears, and even the most diligent workers may not ever reach this lofty goal. However, there are certain measures business leaders can take to help set themselves up for success. Here are some important steps to take to ensure a solid exit plan:
Maximize Profit Potential
It is pretty much a given that selling a company is going to require some clear cut proof that the business is operating in a way that maximizes its revenue generation and profits. However, simply having one revenue stream may not suffice. In general, the most successful businesses have figured out ways to capitalize on multiple revenue streams such that their profit potential is coming in from various channels. When it comes time to sell, courting and enticing possible buyers will primarily rest on the company’s profit margins, so being able to show that the company has a highly profitable business model with money coming in from more than one direction will be critical.
Set and Attain Growth Goals
Savvy entrepreneurs know that establishing a truly successful operation is going to necessitate so much more than some good ideas. Many successful leaders will no doubt attest to the importance of setting clear goals, including the very specific metrics and benchmarks used to measure their achievement. It is important to consider these goals in the context of the eventual exit plan, as attaining, or failing to attain, certain growth goals, may hinder the exit plan from coming to fruition. Ultimately, having a vision, creating a plan that is actually written down, and demanding accountability will make it easier and more likely that these goals will be attained.
Keep Meticulous Records
Selling a business is one of the most intricate and lengthy transactions business leaders will ever endure. As with most deals, there will no doubt be a rather involved due diligence process during which time the company’s corporate, financial, and legal records will be scoured for issues and discrepancies. As a result, meticulous recordkeeping is absolutely vital and must begin from the very early stages of the business’s existence. One of the best ways to stay organized is by creating a corporate repository. This can be done with a virtual data room that can later serve as a deal room if and when it is time to make that sale.
Stack the Deck
The financial success of a business is of course one of the most important factors in getting a business sold. However, it is clearly the people and the culture of a company that set the tone for how things are run and how well things go. For this reason, putting together a highly qualified, diverse team with unique perspectives and skills is crucial. In addition to helping the company achieve its goals, prospective buyers will likely be interested in understanding the people behind the business, so it is important to have a cohesive and intriguing team.
Identify Prospective Purchasers
The only way a business will get sold is by ensuring that the right buyer is found. This piece alone can take quite some time, and it is something that the company leaders should be thinking about years before they actually plan to pitch the sale. This means that leaders must always be cultivating opportunities and nurturing existing partnerships, as it is usually regular business relationships that lead to mergers or at least introductions to potential buyers. In the end, having clear goals, a concrete plan, and constantly being on the lookout for a good fit will make it more likely that the right sale falls into place.