Every business owner has to transition out of ownership at some point, so it’s never too early to begin preparing for that transition. Preparing involves understanding what you you should improve, and also what you should be sure not to overlook. In a recent Inc. article, “Four Mistakes That Could Lower Your Business’s Value and Weaken Its Salability,” author Bob House addresses oversights that could spell trouble for business owners looking to sell.
House explores some excellent points in his article, such as the idea that you should always have, what he calls, “a selling mindset.” The reason this mindset is potentially invaluable for a business owner is that when operating in this way, owners are forced to stay on their toes.
House writes, “a selling mindset encourages continual innovation, growth, and investment, helping your business stay ahead of the competition and at the top of its potential.” Having a selling mindset means that business owners have no choice but to perform periodic reality checks and access the strengths and weaknesses of their businesses. When business owners fail to have a selling mindset, the following areas may be overlooked.
#1 Record Keeping
For House, good record-keeping tops the list of oversights that business owners need to address. As House points out, both potential buyers and merger and acquisition advisors will want to examine your books for the last few years. The odds are excellent that before anyone buys your business, they will look very closely at every aspect of your financials, ranging from your sales history to your operating costs.
The next potential area of oversight is innovation. House notes that a lack of tech-savviness could make your business less attractive to prospective buyers. Virtually every business is now impacted in some way by its online presence, whether it is the quality of that presence or lack of it altogether.
For House, a failure to maintain an active online presence could be associated with a failure to innovate. Even if your company is innovative, if you do not maintain a coherent and robust online presence, this could portray your company in a negative light.
Many business owners want to sell their business to fund their dream retirement, but don’t know where to start.
I’ve used these 5 Critical Questions to help my clients prepare and start increasing their business value.
#3 Workforce Stability
House also believes having an unstable workforce could negatively impact your business’s value and salability. Most prospective buyers will not be eager to buy a business they know has high employee turnover. In general, new business owners crave stability. Attracting and keeping great employees could make all the difference when it comes time to sell your business.
The final factor that House notes as a potential issue for those looking to sell their business is delaying investments and improvements. House states it is important for owners to continue to invest even if they know they are going to sell. Investing in your business can help it grow and showcase its potential future growth.
Another excellent way to prevent oversights that could interfere with your ability to sell your business is to begin working with a merger and acquisition advisor. A top-notch M&A advisor knows what mistakes you should avoid. This experience will not only save you countless headaches but also help you preserve the value of your business.