How to Build Your Business to Sell
The biggest mistake owners make is they don’t plan their exit strategy from the beginning.
There are 30 million businesses in this country, but the reality is that eight out of 10 of them can’t be sold. Sadly, instead of selling for top dollar, securing themselves for the next stage in their life, many business owners end up selling for pennies on the dollar, closing their doors or filing for bankruptcy.
The solution is as simple as it is complicated. However, common sense is not as common as it once was. No one ever plans to fail; they fail to plan.
In order to build your business to sell for its optimal selling price, you need to take action now on what I call the “Six P’s”: People, Product, Process, Proprietary, Patrons and Profits.
1. PEOPLE – If you do not have an assistant, you are the assistant. As my friend Donald Trump advises, “Surround yourself with people smarter than you.” I cannot stress the importance of hiring intelligent, loyal and hardworking employees. This is crucial to your business’s worth.
2. PRODUCT – Product uniqueness increases a company’s value immensely. Make sure your product fills a void, offers a niche and creates the highest demand.
3. PROCESS – Process is the key to a buyer’s heart. Create an automatic, systematic, sustainable and seamless process that is proprietary, productive and cost effective. Essentially, the show must be able to go on once you’re gone.
4. PROPRIETARY – The more intellectual property you have, the more valuable your company will be and the more buyers you will attract. Ninety-five percent of businesses are not properly branded. Make sure you’re building your company and personal brand. Ask yourself the following: Is your industry unique? Do you have a niche? Any patents, trademarks/trade secrets/recipes, exclusive contracts and/or a healthy database? Brands and databases create big value. They are the reason why Facebook paid billions for Instagram and Whatsapp. The Coke brand alone is worth billions.
5. PROFITS – Many owners have high revenues with very little to no profit. It’s imperative to manage costs, to know your industry standard’s profit margins and to work diligently on increasing your bottom line. It’s not what you make, but what you keep that will entice buyers to pay you more.
6. PATRONS – Customers are the fuel to all businesses – without them you’ll run out of gas. It’s imperative to maintain current clients while obtaining new ones. Buyers will not consider a business without a healthy customer base. Know your customer acquisition cost and run effective marketing campaigns to expand your brand. Roll out the red carpet and continue to provide “wow” client experiences. Remember, it’s much more cost effective to keep happy customers than it is to find new ones.
Finally, always inspect what you expect so that you can protect what you do! Delegate to your team; Trust, but verify. Follow up or risk the job falling through.