This past year I’ve been working with a number of small companies who are interested in selling their business. My experience in getting the best value (which means money, right?) is to follow a few key things in your business:
1. Be friends with your competitors: Nobody is going to understand the value of your business like your competitor. Many times in small businesses your competitor may value your business more than you do! Cutthroat strategies usually pay off in the short-run, but can cost you on the back-end by deteriorating relationships with your potential buyer. Small businesses in niche markets, whether or not they have a national presence, can be difficult to match a buyer for.
2. Develop your processes: Having key people in your business usually make it successful, but you don’t want to be the most important one. Implementing processes within your business, removing yourself from the sales process as much as possible, and developing a culture where you don’t need to work 100 hours each week are critical pieces to making your business attractive to potential buyers.
3. Understand the Value of Money: When considering offers accept that they may not come in at what you think you’re company may be worth. That’s OK. You also need to consider the value of having your time freed up to explore other opportunities, the risks associated with that industry (which have usually been incorporated into the price) and the knowledge you keep as one having successfully sold their business. So the point here is actually to understand the value of everything else you gain besides money. While this may seem counter to my opening statement, I’ve seen owners continually hold out for better offers, only to see those offers diminish over time rather than increase. Timing can be everything.
Being a business owner is tough and not for the fainthearted. The end-game for every business owner should be to maximize their exit and achieve it that exit within a reasonable time frame.