Did you know that less than 10% of small business owners successfully sell their business?
Many business owners work hard to grow their business, but often forget to plan for the day they might want to sell. This can cause problems down the road. Did you know that less than 10% of small business owners successfully sell their business, largely because they have a solid exit plan? In this article, I’ll show you how to avoid this problem, and ensure your business is sellable and valuable.
How to Build Your Business with Sales in Mind
- Make Your Operations Run Without You
- Build a Brand That Doesn’t Depend on You
- Take Care of Your Financial Health
Step 1: Make Your Operations Run Without You
Buyers want businesses that can run without their owners. That means having clear systems and processes that your team can follow. “If you’re a fulfillment service, no one wants to buy your business.” Nathan Hirsh, who founded and sells FreeeUp.
Expert Tips:
- Write down every step in your business, from accepting new clients to daily tasks, in standard procedures. Each procedure should be clearly stated, easy to find, and easy to follow.
- Use tools to automate repetitive tasks. This saves time and reduces errors.
- Make sure your team can run the business without you. Your business should not be dependent on one person. When you take a few weeks off, your business should not lose its way.
Leona Watson’s story:
Business owner Leona Watson explains that “you need to detach yourself from your business.” She did this by exercising in the morning and not going into the office until midday. As a result, she “stopped being a nuisance to the team.” She then created procedures instead of “constantly doing your thing and wondering why your team is constantly pestering you with easy-to-answer questions.” Her business went from existing in her head to being a document that others could use.
Your Action Steps:
Each week, take an hour to write down 3 processes in your business that you can delegate to your team or automate.
Additional resources:
Here is one of the Forbes articles I read most about how I grew my service beyond my capabilities.
Step 2: Build a Brand That Doesn’t Depend on You
Small businesses often rely heavily on their owners for sales and marketing. But when you’re trying to sell, your face can’t be the brand of the business. Like Michael Hyatt, who recently changed his company name from ‘Michael Hyatt’ to ‘Full Focus.’ “The company has outgrown my name,” he explains of the name change. “I’m proud of what we’ve accomplished and excited about where we’re headed. With our commitment to continued growth, this is a natural next step toward greater corporate success.”
Expert Advice:
- Create a brand that is separate from you. This can include things like using your product name, instead of your personal name across all of your marketing channels, such as your website, social media, brochures,…
- Showcase your team and their skills in your marketing materials. This helps shift the focus from you to the rest of the business.
- Make sure your customers keep coming back because the business is good, not just because they like you.
Photographer Sue’s Story:
Sue Bryce built a $1 million business around her unique photography skills. She was always thinking about how she could separate herself from her business. She shared a quote in a recent podcast interview that made a huge difference in her business: “I’m not that important.”
Your Action Steps:
Reflect on Sue’s quote this weekend as you think about your business brand. How does it relate to your personal brand? Write down one way you can make your business appear more independent.
Additional resources:
Here’s my 3-step guide on how to transition from a personal brand to a business brand.
Step 3: Take Care of Your Financial Health
Your business must be financially sound in order to sell. Buyers want businesses that are profitable, have clean financial records, and are looking to grow.
Expert Tips:
- Keep your financial records clean and up to date. Use accounting software to track your income and expenses accurately.
- 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 survive.
Your Action Steps:
The next time you sit down with your accountant, take some extra time to review your financial records. Are they clean and up to date? Look for areas where you can save money or become more efficient, so you can increase your bottom line. You’d be surprised how many subscriptions or licenses you’re paying for that no one on your team is using.
How You Can Build to Sell
Now it’s your turn! Follow these steps to make sure your business is ready to sell:
- Document one process in your business this week.
- Decide in one way to make your brand less dependent on you.
- Review your finances and find one area to improve.
Reflect on these tasks and see how they can help turn your business into a saleable asset.
Conclusion
Building a business for sale isn’t just about the end goal of getting off the market; it’s about creating a strong, self-sustaining, and profitable business. By following these steps, you can ensure your business is attractive to potential buyers. Remember, the biggest mistake business owners make is not building a business for sale. Avoid these mistakes and prepare your business for getting off the market.
