We follow with interest business author John Warrillow, famed for his book Built to Sell, (especially since our marketing manager has had the pleasure of meeting him, so looks forward to excerpts and news whenever they appear).
Of course, the idea of having a sale-ready business has been around for a long time, by the likes of Michael Gerber in the 80s.
If you’ve not had the pleasure of reading Warrillow’s publications, here are some salient points to consider, whether or not the sale of your business is on your immediate horizon.
8 ways to tell if your business is ready to sell
- Financial performance: Someone could buy your business for strategic reasons, but most acquisitions are for financial reasons. Business value and its saleability are directly related to the size of the business’ expected future earnings and the risk that those potential earnings will materialise.
- Growth potential: If the future stream of revenue is going up every year, it significantly increases the business’ value.
- Dependency: If a business is overly-dependent on one customer, one employee or one vendor, it’s less attractive to a buyer.
- Valuation see-saw: Operations that require a large investment of cash with a lag in earning it back can depress the value of the business.
- Recurring revenue: Potential buyers will consider whether a business has guaranteed revenue built into its structure. Without it, buyers will be less interested.
- The monopoly control: Stronger candidates for sale will have less competition and will better differentiate themselves in their markets.
- Customer satisfaction: Buyers will want to know if a business has satisfied customers and if there’s tangible proof of that.
- Hub and spoke: If a business is built around its owner, it will be difficult to sell.
If you own a business, the way you should build it, run it and manage it should be as if you intend to sell it, thereby doing everything to maximise its value. A key way to ensuring you maximise your business valuation is to seek objective professional advice well before you set a sell date.
Start your day with the purpose to create a better business today than you had yesterday. Choose OBT Financial Group for a professional and accurate valuation service on 07 5462 2277 when it comes time to thinking about getting your business sale plan in order.