Are You Ready to Sell?
Posted on May 22, 2015 by Danny Windsor
Maybe not, but that should be your on-going goal for your business. In a recent Inc. magazine article, Norm Brodsky wrote, “I have long believed that you should build a company to sell it for as much as possible, even if you don’t plan to sell it anytime soon. From the start, you should know what practices will get you top dollar. By adopting them, you’ll wind up with a better company (Brodsky, p.66).”
Brodsky focused on a couple of key areas in his article that will make a company better and more valuable as follows:
- Eliminating vulnerabilities– In the article, Brodsky used the example of customer relationships and dependency on too few customers. “If you want the highest multiple, you need long-term contracts that you can transfer to a new owner without losing customers.” Also, “the company shouldn’t be too dependent on a few customers. The smaller the percentage of revenue that your largest customers account for, the more valuable your company will be (Brodsky, p.66).”
- Not Dependent on the Owner– Brodsky writes, “Why would someone pay a lot for a company that could go downhill when the founder leaves (Brodsky, p.66)?
The above points are only two areas that need to be addressed in order to increase value and build a better company. There are many more areas that need attention in every company, which improved, would result in greater value. How can an owner address these areas? By having a consistent, planned, on-going process with checklists and time lines that address each key area of a company. An excellent tool for this is our firm’s book, The Exit Strategy Handbook and our firm’s excellent tool, the B2B Exit® Software. Building a company of value does not happen by accident, it requires an on-going, measurable process that tracks each key area of the business. Even if you are not planning to sell, your company will be better. Contact any of our partners who will be glad to meet with you and demonstrate how the book and software can help build a business of high value.
*Brodsky, Norm, (2015), Inc.
photo credit: what will yahoo do? via photopin (license)
