If you’re a business owner, you’ve probably thought about selling your company at some point. If that’s something that interests you, it’s important to start thinking about how you can position your company for sale right now. We know what you’re thinking: “I don’t want to plan for something that might never happen!” But here’s the thing: most businesses are not sold because they haven’t been properly positioned for sale. That means they’re not generating enough revenue or profit, and have too much debt or overhead costs relative to their current business model (or lack thereof).
People wait too long to position their business for sale.
In business, you can’t afford to wait until you are ready to sell. If your business is doing well and has room for growth, it may be time to consider positioning your company for sale. The first step in this process is figuring out why the sale is necessary. Are you looking for a change of pace? An end of a chapter? A new beginning? The answer will help determine how quickly and under what conditions the sale should happen.
It starts with the books.
You need to keep good records. It’s important to know where you stand financially, what your margins are and how much cash is coming in and out of the business.
A healthy, growing business.
You should also be looking at your company’s EBITA, or Earnings Before Interest, Taxes, and Amortization. This is a great number to monitor when you plan to sell your business because it shows how much profit you are making, before taxes and overhead costs are taken out. In general, a healthy growing business will see positive EBITA growth and positive EBITA numbers in the 3-5% range of sales. A 10%+ EBITA margin is ideal for buyers who are looking for an attractive return on their investment. However, if your company has negative EBITA margins or no earnings at all (known as “zeros”) then this could mean one of two things: either there is something wrong with the way you’re running things from a financial perspective (most likely), or perhaps its time for you to consider selling and finding another opportunity elsewhere. If neither option seems appealing then maybe it’s time for some drastic measures.
The absence of key-man risk.
As a business owner, you should be aware of what key-man risk is. Key-man risk is the risk that your company will not be able to survive without a key person. This can happen when that individual leaves or becomes incapacitated. When it comes to this topic, it’s important to use the word “key” very carefully when referring to your management team. You need a strong leadership team that is capable of taking over responsibilities if something happens to one of your managers. If you have a great management team in place and they are trained on each other’s functions, then you won’t have any issues with key-man risk.
Standardized service and client implementations.
The sales process, billing process, accounting process, customer service process, and training process should be standardized.
Have a diverse set of clients at different stages of their own growth cycle.
You need to have a diverse set of clients
at different stages of their own growth cycle because they will all have different needs. For example:
● You want to work with people who are just starting up their businesses, even if they don’t have a big budget right now. These entrepreneurs can help you by sharing ideas, getting excited about your business, and recommending you to others.
● You will also want an established client who is willing to pay more for services that solve bigger problems than those facing younger companies or startups. And this client may be open to being a reference for you as well —so it’s worth investing in them from the beginning!
A strong management team with skin in the game.
The team you have in place should be committed to the company’s success, incentivized to stay and work hard, and possess the skills that will help your company grow. If you’re considering bringing on new employees or investors, it’s also important to make sure that they are aligned with your goals for the long-term success of your business.
An easily identifiable brand that carries weight in your market space.
To create a brand, think of it as a promise to the customer, employees, investors, and community. The world will see it as well. It is important to have a strong and easily identifiable brand because people respond to brands that carry weight in their market space.
A smart marketing strategy that works to get new customers and reminds existing customers why you’re still there for them.
is not just about new customers but also about keeping existing customers and reminding them of the value you bring to them. Marketing is not just advertising; it’s building relationships. One way you can do this is by creating a marketing strategy
that works to get new customers and reminds existing customers why you’re still there for them.
A clearly defined sales process that those who are selling are empowered to execute.
You should define the problem before starting on a solution. For example, if you are selling your online business, don’t focus on what other people think of your business as much on how you can increase revenue. The best way to do this is by creating a sales process that’s clear and concise for everyone involved in the selling process. When creating this process, make sure goals define it; not just numbers—make sure the goal is tied to an end result for the buyer or buyer’s experience
with the product (and not just about hitting sales quotas). This will help set both parties up for success because it will allow them to understand how they can make money from working together from day one. And remember: It’s okay if these goals are ambitious and difficult! But stay realistic too; after all none of us want our employees to fail at anything!
Following these steps will help you run your company more efficiently and for higher ROI, whether you plan to sell or not.
●Determine the value of your business.
●Calculate your company’s ROI (Return on Investment).
●Identify the resources that are needed to scale up or scale down.
If you’re looking to sell your business, it’s important that you do everything in your power to position yourself for success. Your best chance at getting the most money possible is by having a healthy and profitable company with a well-defined sales process that you can repeat over and over again. This will give potential buyers confidence that they won’t have any trouble finding new customers once they take over operations, which means more money for everyone involved!
If you have any questions or feel like you need help with your branding or strategy, don’t hesitate to contact us at Reversed Out Creative
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