SETTING UP A COURSE FOR SALE
All businesses have a lifecycle. Good ones move quickly out of the start-up phase and into a position where they can start delivering real profits.
But for people who have been running their business for a while, there often comes a time when they start thinking about what’s next. For many, selling all or part of their business seems like an appropriate reward for their years of effort.
Over many years of working with creative companies, I’ve met plenty of owners who are ready to sell their businesses. But I’ve seen very few companies which are ready to be sold. And although an owner may be ready to move on, that doesn’t necessarily mean there’s a market for their business, or that a sale will reap the financial reward the owner expects.
Here’s a (not exhaustive) list of things to think about when considering if your business could be attractive to a buyer.
- Is it more profitable than the industry norm?
- Does it have a low level of debt?
- Have there been recent sales of similar businesses?
- Does the business do something unique which gives it a competitive edge?
- Does it have technical expertise which is difficult to replicate?
- Does it have well documented systems and processes?
- Does it operate in an industry which is forecast to grow?
- Is it a competitor firm which someone would like to remove from the market?
- Is the company dependent on key people, particularly the owner?
- Has anyone made an approach about buying the business?
If the answers to these questions are mostly ‘no’s, it’s likely that there’s some work to do before your business is ready to take to market. But it’s not all doom and gloom. If you’re ready to set a goal of having your business be saleable, there are strategies which can be put in place. And the starting point is profitability.
Ensuring that your business is generating sufficient EBIT is obviously a goal for any owner. And it can only make your company more attractive to any potential buyer and maximise any potential sale price. The message is this: if you’re thinking about selling, focus first on profitability.
If you’ve got issues in your business you don’t seem to be able to get on top of, why not get in touch? Not only do we provide a full suite of bookkeeping and tax services here at Generate, but we’re also able to help with business coaching, strategy workshops, business plans and much more. You name the problem and I’m sure we can help.