For many business owners now is the time to reflect on this past year’s achievements and to set goals for the year ahead.
Most business owners will set goals to hit certain revenue or profit objectives. But if your goal is to own a more valuable /saleable business, consider adding one or more of the following goals:
- Get your Sellability Score. All goals start with a benchmark of where you’re at today, and by understanding your company’s Sellability Score, you can pinpoint how you’re doing now and which areas of your business are dragging down your company’s value. (Follow this link to the 8-minute survey: transworldma.com/sell-side/sellability-investability-calculator)
- Companies that can perform well without their owner are more likely to get an offer to be acquired when compared to more owner-dependent businesses. So consider taking a two-week vacation without checking in with the office, to see how well the business performs without your daily intervention. When you return, you’ll see how well your company performed and where you need to make a key hire, create a new system, or delegate more authority.
- Document at least one process per month. You know you need to document your key systems and procedures, but you may be overwhelmed by the task of taking what’s inside your head and putting it down in writing for others to follow. Commit to documenting one system a month and within a year you’ll own a more sellable company.
- If you’re like most business owners, you’re still your company’s best salesperson, but this can be a liability in the eyes of an acquirer. By the time you sell, none of your key customers should think of you as their primary point of contact. Commit to offloading at least one of your personal customer relationship to your sales team by mid-year.
- Cultivate a new relationship with a new supplier. Having a “go to” group of suppliers is great, but an over-reliance on one or two suppliers can create a liability for your business. By spreading some of your business to other suppliers, you keep your best suppliers hungry and you can make a case to an acquirer that you have other sources of supply for your critical inputs.
- Create a recurring revenue stream. Valuable companies can look into the future and see where their revenue is going to come from. Recurring revenue models can vary from charging customers a small amount for a special level of service to offering a warranty or service contract.
- Find your lease (and any other key contracts). When it comes time to sell your company, a buyer will want to see your lease and understand your obligations to your landlord. Having your lease handy can save time and avoid any nasty surprises at the eleventh hour in the process of selling your company.
- Check your contracts and make sure they would survive the change of ownership of your company. If not, talk to your lawyer about adding a line to your agreements that states the obligations of the contract “surviving” in the event of a change of ownership of your company.
Instead of just building a bigger company, also consider making this the year you build a more valuable /saleable one.
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a free, confidential, consultation with us, have them contact me at:
Mike Ertel, CBI, M&AMI, CM&AA
Managing Director, Broker
©2019 J. Michael Ertel PA