Always be Prepared to Exit your Business
You’ve shed blood, sweat, and tears to build your business. Some might have dreamt of selling the business from Day 1 and others might not have thought about it until reading this blog.
The time will most likely come that you will need to consider exiting your business. Hopefully, it’ll be a good thing where you’ve built something with so much value that other companies are pursuing you and you have that leverage. Other cases may include a family emergency where you need to get out ASAP.
Either way, it’s better to be ready for the unexpected as many deals fail because the seller isn’t organized and is slowing the process down. This decreases the buyer's confidence in the business they are about to buy and also reduces their enthusiasm surrounding the transaction.
You can be sure any buyer will need to look at your financial statements and business metrics as part of the acquisition process. Trust in those numbers are paramount for the transaction to move forward. We focus on this area, but there are many other things to consider.
Xero has created an excellent summary of things to consider to make sure you’re ready for the unexpected. Do these things, and you should be able to demand a higher price for your business:
The most helpful of Xero's tips that we've found are:
- Make yourself replaceable (Redundant) - Make yourself replaceable (Redundant) - Follow the E-Myth (The E‑Myth Revisited by Michael Gerber) principle of working "on" your business and not "in" it. It's hard to sell a business when you "are" the business. This is especially critical for service businesses.
- Document everything - One of the least enjoyable things to do for most but critical for when you need to hand over the keys. Documentation is helpful for any business whether you're selling or not, so don't just do it for your Exit strategy. New hires benefit from formal documentation as well.
Although Basis 365 Accounting can help get your accounting in order and firing on all cylinders, we recommend utilizing experts that can help you prepare beyond the accounting and guide you through the transaction process. Fractional CFOs are a great resource to consider (try B2B CFO® to find the right mentor for you).
Reach out to us for more information or referrals.
Photo by Braden Hopkins on Unsplash