Did you know that less than 10% of small business owners successfully sell their business?
Many business owners work hard to grow their businesses, but they often forget to plan for the day they want to sell. This can cause problems down the road. Did you know that less than 10% of small business owners actually sell their business, mostly because they had a good exit plan? In this article, I’ll show you how to avoid this problem and make sure your business is both sellable and valuable.
How to Build Your Business with Sales in Mind
- Make your operations work without you
- Build a brand that doesn’t depend on you
- Keep your finances healthy
Step 1: Make your operations work without you
Buyers want a company that can run without its owner. This means having clear systems and processes that your team can follow. “If you are responsible for execution, no one will want to buy your company.” Nathan Hirsh, Founder and Seller at FreeeUp
Expert advice:
- Write down every step of your business, from onboarding new clients to day-to-day tasks, in a standard procedure. Each procedure should be clearly described, easy to find and easy to follow.
- Use tools to automate tasks that are done over and over again. This saves time and reduces errors.
- Make sure your team can run the business without you. Your business shouldn’t be dependent on just one person. When you take a few weeks off, your business shouldn’t miss a beat.
The story of Leona Watson:
Leona Watson, a business owner, explains that “you need to step away from the business.” To do this, she would exercise in the morning and not go into the office until noon. This allowed her to “stop being a distraction to the team.” She then created procedures instead of “constantly improvising and then wondering why her team is constantly bugging her with easy-to-answer questions.” The business went from being in her head to being in a document that others could use.
Your action step:
Each week, spend an hour writing down three business processes that you can delegate to your team or automate.
Additional resource:
This is one of my most read Forbes articles about how I expanded my services beyond my capabilities.
Step 2: Create a brand that doesn’t depend on you
Small businesses often rely heavily on their owners for sales and marketing. But when you want to sell, the image of the company can’t be the brand. Take Michael Hyatt, who recently changed his company’s name from “Michael Hyatt” to “Full Focus.” “The company has grown beyond my name,” he explains the name change. “I’m proud of where we’ve been and excited about the path we’re on. With our commitment to continued growth, this is a natural next step toward even greater company success.”
Expert advice:
- Create a brand that is independent of you. This can include things like using product names, rather than your personal name, across all of your marketing channels, such as your website, social media, brochures, etc.
- Showcase your team and their skills in your marketing materials. This helps shift the focus away from you and toward the entire company.
- Make sure your customers keep coming back because business is good, not just because they like you.
The story of photographer Sue:
Sue Bryce built a million dollar business around her unique photography skills. She was always thinking about how she could differentiate herself with her business. In a recent podcast interview she shared a quote that made a huge difference in her business: “I’m not that important.”
Your action step:
Reflect on Sue’s quote this weekend when you think about your company’s brand. How does it still tie into your personal brand? Write down one way you can make your company feel more independent.
Additional resource:
Here is my three-step guide on how to go from a personal brand to a business brand.
Step 3: Keep your finances healthy
Your business must be financially sound in order to be sold. Buyers want a business that is profitable, has clean financial records, and can grow.
Expert advice:
- Keep your financial records clean and up to date. Use accounting software to accurately track your income and expenses.
- Focus on profitability, not just revenue. High revenue doesn’t mean much if your profit margins are low.
- Review your financial statements regularly to detect problems early and ensure your business can sustain itself.
Your action step:
The next time you sit down with your accountant, plan some extra time to review your financial records. Are they clean and up-to-date? Look for areas where you can save money or be more efficient, so you can increase profitability. You’ll be surprised how many subscriptions or licenses you pay for that no one on your team uses.
How to build to sell
Now it’s your turn! Follow these steps to make sure your business is ready to sell:
- Document A process in your business this week.
- Decide on a way to make your brand less dependent on you.
- Review your finances and find an area to improve.
Reflect on these tasks and see how they can help transform your business into a salable asset.
Conclusion
Starting a business to sell isn’t just about the end goal of an exit; it’s about creating a strong, independent, profitable business. By following these steps, you can ensure that your business is attractive to potential buyers. Remember, the biggest mistake business owners make is not starting a business to sell. Avoid this mistake and prepare your business for a great exit.
