Creating A Business That Can Thrive Without You
For every small business owner who wants to cash-out, there are about a hundred businesses that just won't sell. Whether you want to sell or not, it's always reassuring to know that the business you’ve built from the ground up is actually worth something.
Build Your Business to Sell: 3 Critical Steps:
- Scalability
You need a service or product that has the potential to scale. It also must be (1) valuable to your customers, which avoids commoditization; and (2) have "teachable" processes for new employees.
Being all things to all people is never a winning strategy. Assess what's special about your company and focus on that one thing. It also allows you to put a process in place around that one core competency.
- Build a Sales and Management Team
If you're the "rainmaker" responsible for all major sales, you won't be able to sell your business.
Hire at least two people for sales. A potential acquirer will want to see that you have an offering that can be sold by salespeople in general and not just one superstar salesperson.
It's also critically important to build a reliable management team. If you're going to sell your
business, you need to demonstrate that it can run without you.
- Create a Positive Cash Flow
If your company generates excess cash each month, a potential acquirer will pay more because he won't have to commit funds up front for working capital.
How do you turn an average business into a highly cash-flow positive one? (1) insist on upfront payment for services rendered - or drop the client; and (2) stop drawing a salary for a year or so.
Neither of these are particularly easy options. But let's face it; if it means the difference between getting a multi-million dollar payday when you sell your business, versus having to sell for pennies on the dollar, it's worth it.
By John Warrillow
