How to Make Your Company More Appealing to Buyers
An exit strategy is a must when considering selling your business. Don’t just emphasize your company’s resistance to recession. Show prospective buyers how your company has development potential, which means having a robust and convincing business strategy that forecasts your growth.
Just as building a business takes time, so does selling it to a reputable organization because industry rivals are likely expanding as well. To pique the interest of potential consumers, your company needs to demonstrate that its products and services can outperform rival products and services. When selling the business, you must demonstrate to potential buyers that it can outperform its competitors. The profitable way to exit the business is through correct planning.
Of the many legal and financial arrangements required to get your business ready to sell, the following action items help make it more desirable to buyers. Consider these actions to make sure your business appeals to those potential buyers:
- Organize your finances
- Build an independent company
- Streamline internal operations
- Have company/market sales processes in place.
Organize Your Finances
Strive to keep their financial statements flawless. Don’t use financial gimmickry to inflate your company’s worth. For example, if you want to sell your house, you will make sure that it looks good from all aspects; you’ll check the ceiling, doors, and windows and make sure no part of the house looks untidy. The factors that make a company appealing to buyers are the equivalent to a home’s “curb appeal”
Preparing to sell your company requires similar tidiness: clean up the front and back offices, arrange your data as cleanly and simply as possible, and ramp up your marketing efforts. Next, increase the worth of your company by aggressively pursuing value-creation activities. Following that, the company should explain how it generates shareholder value.
Assessing the company’s financial performance and developing strategies to enhance it in the future is critical. Potential buyers will seek organizations that produce shareholder value because they want to know what they will receive in exchange for their investment.
Many business owners think this is counterintuitive and that they should only invest in their company if they want to retain it. However, disregarding these tasks only reduces the company’s worth and makes it less appealing to buyers. Therefore, remember that the buyer’s perspective is your reality when forming an exit strategy.
Build an Independent Company
Structure your company to function independently of you. Such independence increases its value and makes it easier to sell. Prospective buyers want a company with robust, efficient systems that work well without the current owner’s involvement. Heavy dependence on the owner makes it difficult for a new owner to grow the company and also increases the risk of company failure.
Follow these steps to build an independent company:
- Set the goal to fade into the background gently and allow your staff to take center stage to maximize your company’s value.
- Put together a solid management team and give them the authority to delegate and make choices, encouraging them to flourish.
- Document and update all operating processes and procedures to ease the transfer to new management when the transaction is complete.
- Make sure your company is renowned for its product or service, not for who you are as a person.
- Redirect your work to your team and empower them to handle issues and make decisions.
- Keep an exit strategy ready. This strategy will include objectives to raise the worth of your company before it sells.
Streamline Internal Operations
Whether you’re a new entrepreneur or a seasoned business owner, operations always need improvement. Fine-tuning your procedures improves the efficiency of your organization and saves money. You must understand how to enhance business operations in ways that will benefit your company. As you prepare your company for your departure, update protocols and procedures to eliminate bottlenecks, accommodate new technologies, materials, and equipment, and increase productivity.
- Consult your management and exit planning advisory teams to streamline and strengthen existing internal operations.
- Staying current on innovations related to your industry to aid the discovery of best practices.
- Measure small key performance indicators consistently by examining the company’s data for existing trends. Then, use the findings to make informed decisions about your company’s operations.
- Listen to your customers’ feedback, pointing out product and service deficiencies.
- Prepare to sell your business by compiling a list of all assets and liabilities, including intellectual property, client lists, equipment, patents, copyrights, etc.
Have Company/Market Sales Processes in Place
Marketing helps increase sales and revenue and creates brand awareness by reaching out to customers. Using social media marketing strategies establishes an online brand presence. Capitalize on that by notifying consumers about sales via tweets and hashtags on Twitter and Facebook, inviting people to events your business hosts, and conducting email marketing to remind consumers of your business’s popular products and services. Online marketing helps you build long-term relationships with your clients.
A diverse, loyal clientele means a better business, which helps build an effective exit strategy. Buyers prefer to see a diversified customer base. They also prefer to know if you have recurring buyers for your products and services.
You may choose affiliate marketing to partner with bloggers, YouTube channels, and influencers to promote your products. If your campaign is successful, it will generate many leads. This type of practice ensures that your target audience is talking about your brand. You build brand awareness, and recognition follows.
Conclusion
Reducing your direct engagement in the company is an essential first step toward increasing its worth and, more importantly–making it more appealing to buyers. A thoughtfully developed exit strategy should reduce dependence on you by letting your staff manage the business confidently.
Business exit advisors know that a business that can function without the owner(s) is more valuable to potential buyers than a business that requires the owner’s day-to-day engagement to function efficiently. Whether you want to sell your business or not, removing the company’s dependence on you gives it a stronger foundation for growth. It allows you to enjoy the quality of life that most business owners desire.
However, creating an exit plan may be a complicated and scary process, which is why many business owners prefer to collaborate with consultants who have the appropriate skills and expertise to guide them.
Quantive’s Business Performance Group helps business owners determine whether their current business value matches their exit needs. Business owners who are truly successful in achieving an exit are proactive about exit planning and deal structuring. Contact our BPG team today.
