The Benefits of Building to Sell
By Andy Kocemba
Some business owners are very realistically considering the sale of their business. They are either ready to retire or ready for new challenges. For others, this thought couldn’t be further from their minds. They are engaged and excited both by the present and the future of their business. But for both, improving the main value drivers of their business will bring great benefit. Not only will these improvements increase the value come the day of the sale, but they will also increase the enjoyment in running the business on a day to day basis.
Here are the three areas, and the benefits both now and later:
Profits: This is the main factor in business valuation. Buyers want to know that a business will support their lifestyle and provide a return on investment, all while supporting the debt they took on to buy the business. A more profitable business attracts more buyers and commands a higher sale price. It’s easy to see how that makes selling a better experience.
But running a profitable company provides enjoyment prior to the sale as well. Greater profits give you the freedom to achieve more of your personal goals, and allow you to enjoy your business more than if you were struggling to pay the monthly bills. You might think that focusing on growing and maintaining profits is an obvious business goal, but you might be surprised by how many of your daily tasks don’t directly work toward increasing profits.
Infrastructure: A business with a strong staff, well-documented processes, and defined operating procedures will always sell for more, and sell faster, than a company without. Buyers want to know that the business they are buying will continue strong into the future, and a strong infrastructure is one way to assure that.
Prior to selling, a solid infrastructure will benefit an owner personally as he or she can spend more time away from the business due to the reliable staff on hand, and can freely focus on high-level strategy knowing the day-to-day operation is in good hands. This allows the business to grow and flourish while maintaining a strong foundation. It also provides for an owner to maintain an agreeable work/life balance.
The Intangibles: Items like brand recognition and intellectual property are those items unique to your business that no other competitor can boast. When selling your company, the stronger these intangibles, the more confidence a buyer will have that your business has a leg up on the competition. With this confidence again comes a higher sale price and a faster sale.
Again, like the examples above, these intangibles provide deep benefit to the business in the years prior to sale as well. They can make obtaining new clients much easier, and strengthen the hold you have on maintaining your current customer base. It is this uniqueness that keeps people coming back to you.