Why You Should Always Be Ready to Sell Your Business

Some business owners enter their industry knowing their plan is to sell one day. Others want to create a legacy they can pass on to their kids. Then there are those who love what they do so much, they plan to “die with their boots on”—they don’t want to retire and they have no intention of leaving the business.

But even if you have no intention of selling your business, making sure you’re sale-ready can position you for greater success. There are plenty of companies looking to buy successful businesses, and they’re looking for ones that are sale-ready—businesses with a strong brand identity, efficient operations, and strategic advantages in the marketplace. They want businesses with strong financial foundations, intentional growth strategies, and the ability to operate without the current owner.

Preparing your business for sale is all about making it easy for someone else to step in and generate a profit—which makes your business stronger, whether you plan to sell or not–which is why our first rule of owning a business is to always be ready to sell.

Selling your business requires ample planning and preparation, and getting it ready for the market could take six months or even five years—it all depends on the state of your finances and operations. We’ve put together a pre-sale task list, so whether you plan to sell in two years, ten, or never, you can start improving your operations, generating greater profit, and making your business run the way it should.

Pre-Sale Task List

If you want to run a more successful business, make it simple for someone else to step in and manage—because that will ultimately make it easier for you to manage. Here are our recommendations to improve your operations and make your business more attractive to buyers:

• Put Yourself in a Buyer’s Shoes
  Look at your business from an outsider’s perspective and consider what issues you might have with the operations, finances, and overall growth strategy. If you were to try and sell today, what would make a deal fall through? How can you address those issues?

• Gather a Great Team
  When you’re running a business, you need a team of professionals to guide you and help you stay on track. Make sure your attorney, CPA, and financial advisor are all on the same page about your short- and long-term goals, and when it comes time to sell, you’ll want an attorney who has experience helping business owners through the buy-sell process. Depending on the size of your business, you may also want to hire a business broker, M&A advisor, or investment banker.

• Stand Out from the Competition
  Every business needs an “edge.” Find something you can offer that sets you apart from your competitors—whether that’s a special product, software, expertise, or an incredible reputation. Not only is this a great strategy to bolster revenue and retention, but it makes your business more valuable to buyers.

• Manage Client Churn
  If you gain 10 clients every month but lose 5, you’re not winning. One of the best ways to address this is to create recurring revenue streams, whether that’s through a subscription, retainer agreement, or other recurring service. There are ways to create recurring revenue in just about any business; it just takes creativity and innovation. We worked with an HVAC company who created a VIP package where customers could pay a monthly fee to receive discounts and priority treatment on service calls—which is a great perk when you live in Florida and your AC unit breaks. If you already have long-term clients and they’re leaving, find out why and address the problem.

• Enhance Your Brand
  Buyers moving into a new market or geographic area typically want a business that has already permeated the market, or at least created a name for itself. You want your brand to be well-known, or at least on its way to being recognizable. If applicable, make sure your employees have uniforms with company logos and that your equipment is branded. Create an intentional marketing strategy and implement it. And most importantly, make sure the brand is bigger than you—no one can be the face of a business forever, so your brand should be about the company, not an individual.

• Manage Your Online Presence
  Your website, social media profiles, and every other online platform should be cohesive and in line with what you want your brand to be. You should also look at your online reviews (like Google and Yelp) and make sure they’re positive. If you have very few reviews, negative reviews, or no reviews, make a plan to change that.

• Manage AR
  No buyer wants to purchase a book of business with tons of invoices that are 90 days late or clients who are used to delaying payments—and you probably don’t like dealing with them, either. Get your accounts receivable under control and create payment plans with short-term agreements, ideally 30 days or less.

• Create an Operations Manual
  If you’re the only one who knows how to train employees, or if John is the only one who knows how to manage inventory, that’s a problem. Each position and process in your company should have an “instruction manual” so you can easily train and transfer roles as necessary.

• Take Care of Your Equipment
  If you run a business that requires heavy machinery or technical equipment, make sure it’s in good working order and replaced as needed. You’ll minimize mid-work malfunctions, look more professional to customers, and create a more attractive purchase for buyers.

• Put Everything in the Company Name
  It might seem like a no-brainer, but you’d be surprised how often vehicles and other equipment are in the owner’s or someone else’s name. It can create a huge hassle when it comes time to sell (or file your taxes), so make sure everything is in the company’s name when applicable.

• Review Your Leases
  If you rent a physical space under the business’s name, you’ll need to determine whether the lease can be transferred to a new owner.

• Prepare a Due Diligence Seller’s Packet
  There are specific documents buyers will ask for during the due diligence process, and having this information organized and ready to go can make a great first impression—it shows buyers you have it together and that you pay attention to details. It also suggests they might not be the only person considering purchasing your business, which incentivizes them to come with their best offer. If you’re planning to sell soon, update the packet monthly; otherwise, update it quarterly. Even if you don’t plan to sell, it’s a good idea to create this type of packet—after all, most business owners will sell if the price is right, and this helps you keep your ducks in a row in the meantime.

• Modify Your P&L
  Before you hand over your P&L to a potential buyer, you’ll need to remove certain expenses that won’t carry over after the sale, like your cellphone bill. This is something that can wait until you know you’re close to a sale, but it can be tedious, so it helps to plan in advance.

• Keep Your Intentions Quiet
  When it comes to selling your business, it’s wise to keep your intentions as quiet as possible until a sale is final. Otherwise, you could tip off competitors who might poach clients or employees. You also run the risk of creating dissension among your team, which could lead employees to look for “greener pastures,” which could then hurt you during negotiations.

Start Today

Whether you plan to sell or not, following these steps will help you improve efficiency, stimulate growth, and build a business that endures in every season. So wherever you are—two years in or two years from retirement—start now. It’ll only make things easier for you in the long run; then, later, if and when you do decide to sell, you’ll be prepared.

If you have more questions about selling your business, we’re happy to help! Click the button below to schedule a consultation, and in the meantime, check out our other blogs about preparing your business for sale.