10 Strategies to Successfully Sell Your Business

No business can be yours alone forever. Eventually you’ll retire or move on to something else. Seventy percent of businesses are eventually sold to someone else. So you should be planning for a sale from day one. The following 10 strategies can help make your business a more enticing acquisition.

Forget Your Ego

Your business is successful, but so too is every business that any buyer seeks to acquire. You must have a realistic assessment of your business’s value. Your emotions and hard work do not matter. Documents supporting your claims do. You must understand your own role in the business, and have insight into how to transfer that role to someone else.

Make Yourself Irrelevant

If you want to make your business more valuable, it must not depend on you. Your business is worth only as much as what someone can do with it. So if it depends on you to run well, a buyer will be in trouble from the beginning.

Market Yourself

Acquirers, like customers or clients, must be able to find you. How can they do so? You must be visible. Go go conferences and give speeches. Become an industry leader.

Streamline Your Systems

Great operational systems help a business run even in your absence. This reduces a buyer’s risk, and increases the overall odds that a business will succeed in your absence. Work on optimizing your operations, and find ways to document these improvements for buyers.

Clean Your Financials

Precision matters. It conveys a lot to buyers. Sloppy records suggest that you may be sloppy about something else. It also slows due diligence, and can ultimately produce a downgrade in valuation. You need to clean your financials now, so that they support—rather than undermine—the story you hope to tell about your business.

Be Profitable—and Document it

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Money can’t be made on positive thinking alone. Ultimately your business’s value depends on its profits. And for those to serve you well, you must be able to document them via a steady trend of improvements and believable projections.

Have Reasonable Expectations

Few companies are worth 10 times EBITDA. So don’t expect your company to be the exception. Instead, you should expect a multiple of 3-5, with improved numbers when profits and revenues increase or the business otherwise becomes less of a risk. Some portion of the sale price will also likely require seller financing, so plan accordingly.

Continuity Counts

Plan on as much continuity as possible in terms of staff, clients, employees, and vendors. The buyer should get the business you have now—not one that declines because of poor planning. The biggest threat to any acquisition is a lack of continuity. So deep roots, strong relationships, and excellent management are all strong selling points.

Focus on Transparency

Buyers don’t like secrets and unpleasant surprises. When they come out during due diligence, value can take and relationships can fall apart. Don’t make predictions based on arbitrary numbers, and ensure you have the documentation necessary to support your claims about the business. Anything less is eventually going to cause problems with your prospective buyer.

Maintain a Sense of Perspective

Some sellers get condescending with buyers who don’t want to pay top dollar. They send industry reports about unrelated businesses. You must maintain a sense of perspective, treating the buyer with respect and being honest with yourself about what your business is and isn’t. Otherwise, the money is yours to lose.