Selling Your Company

Selling Your Company
February 1st, 2020 0 Comments

As a business owner, you may come to the point where you’re ready to sell your business. Whether you’re thinking far ahead, or this is a decision you’re creating for the near future, it can leave you with a lot of questions.

One of the biggest ones is how much your business is worth.

This can be especially difficult to answer, as there’s no one formula to follow. It also includes certain intangibles, some of which are of the most important factors of your business, like your reputation and respect from your customers.

It’s important to think about and see what you’ve built, and to be able to remunerate the concrete benefits of perhaps less concrete aspects of your business.

Your Business Processes ARE the Asset, Not Your Services

Although putting a value on your business often includes taking account of earnings multiples, assets and other financial indicators, the biggest value of your company lies in the way the company has been set up.

The difficult thing, especially with selling a small business, is that for the buyer, there may be a pretty big risk. With small businesses that just have one main product, the business owner could wake up the morning after purchasing to find that the market for the product has disappeared.

There’s also the risk that key executives could decide to leave. Either of these scenarios could render the business essentially useless. For this reason, it’s important to understand what you can do as the current business owner to protect against this.

You could try to grow your business into one that sells hundreds of products and has thousands of employees, to minimize risk. But that isn’t the kind of thing that’s right for just any business, and it probably isn’t what your business is about.

Maybe it’s more reasonable to expect you’ll be selling a few products, all generally to the same market. It’s still possible to build a business that gives potential buyers more security. This will depend on the way your business has been set up, much more than what your business actually sells.

You Are Building Your Busines

Keep in mind that as you’ve been building your business, you’ve been putting into place certain ways of doing things. That means your business is set up to respond in certain ways to several scenarios.

A business that has written plans in place to respond to many situations and create a specific kind of experience for the consumer is one that will last, regardless of what they’re selling.

This is what’s important and most valuable to a potential buyer. Roadmaps provide a way for other employees to enter into the business and know what to do and how to act.

A solid company culture doesn’t rely on any one or two people, even if they’re key executives. Rather, it’s dependent on everyone working together to create a specific environment.

Business Processes Are the Biggest Asset You Can Provide

A business that runs on many written processes will run smoothly regardless of many variables and worst-case scenarios. This is a huge gift for the person who is going to purchase your company.

It’s a lot of work they don’t have to do. They still have to learn how to lead like you do, but they don’t have to build from the ground up. It’s almost like a system is in place for new leadership.

They already have a roadmap to follow, they just need to understand it and get the hang of reading it.

Imagine you’ve built the ideal company. You have empowered employees who are excited to work for what your company stands for.

You have the foundation and infrastructure solidly in place, so that your employees don’t have to come to you with every problem.

Processes are streamlined, so employees know what is expected of them and clients know what to expect. All of this makes it much easier for somebody else to take over.

They won’t be you, but there will be solid plans in place for them to follow and mix in their own creativity.

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