When is it time to make a break?
Maybe it feels as if you are your business. If it's time for you to walk away, then here are eight things you need to think about before you make the break:
1. Recurring Revenue
The more sales you have from automatically recurring contracts or subscriptions, the more valuable your business will be to a buyer. Even if subscriptions are not the norm in your industry, if you can find some form of recurring turnover it will make your company much more valuable than those of your competitors.
2. Sales Predictability
Businesses that have mastered a way to win customers with a documented sales funnel that produces a predictable set of conversion rates are much more valuable. An acquirer will be attracted to your proven customer-acquiring formula rather than an industry peer who doesn’t have a clue where their next customer will come from.
3. Niche Positioning
Buyers purchase what they cannot easily replicate on their own, which means that companies with a unique product or service which is difficult for a competitor to ‘knock off’ are more valuable than a company that sells the same commodity as everyone else in their industry.
Acquirers looking to fuel their top line turnover growth through acquisition will pay a premium for your business if it is growing much faster than your industry average.
5. Business with a 2IC
A business with a general manager or a second-in-command who has agreed to stay on post- sale is more valuable than businesses where all the power and knowledge are in the hands of the owner.
6. Customer Diversity
Buyers pay a premium for companies that are not over reliant on a major customer. Ensure no customer amounts to more than 10 percent of your turnover and your company will be more valuable than an industry peer with one or two big customers.
7. Happy Customers
Being able to objectively demonstrate that your customers are happy and intend to re-purchase in the future will make your business more valuable than an industry peer that does not have a means of tracking customer satisfaction.
8. A Systemised Business
Written systems and processes significantly increase the value of a business as it can more easily be transferred to a new owner or duplicated. Having written systems also reduce the length of time you have to spend in the business post-sale training the new owner. Before selling, you want a business that runs without you.
If you would like to know more about how The Business Exit Company can assist you to prepare your business for sale, book a free, no-obligation 15-minute phone call with us right here. https://meetme.so/DeanRuscoe
Just pick a time that suits you and we will call you at your chosen time…it’s that easy.
To your business sale success.