Many business owners believe the best time to sell a business is when it’s at its peak performance. In reality, this may not be the ideal time to actually get the most bang for your buck for your hard-earned company. The truth of the matter is that any business owner can benefit from having some knowledge on how to properly position their company for sale from a position of strength.

Businesses are often sold due to multiple reasons: retirement, relocation, new opportunity, etc. Regardless of what you plan on doing with your business in the next five years or so, making some key changes while you have control over operations can go a long way for positioning yourself and your company as an attractive acquisition target. This doesn’t mean coming down hard on your employees and staff to meet unrealistic expectations. What it means is that small changes here and there can help you get your business where you want it to be from a financial standpoint, increasing its value in the long run.

What follows are some key changes you can make to position your business for sale from a position of strength.

A Fresh Look at Your Financials

Many companies hire financial analysts and consultants when it comes time to sell their business. While this does help tremendously, there is still much that can be done in terms of making sure your company’s financials are tip-top shape before the process even begins. This means updating important metrics on a regular basis, avoiding common mistakes owners tend to have with their numbers, and being realistic about what you want out of the deal once it does close. By having accurate data at hand, owners give themselves more control over any negotiation talks down the road.

Performance Reviews – Do Better Than “Good Enough”

Business owners, especially in the service industry, tend to be viewed as salespeople who drive their company’s success. That is exactly why having performance reviews in place for your employees and staff members is so important. These don’t have to be talks that leave everyone in tears or dreading Mondays. What they should do, though, is give employees actual goals to strive towards based on what you want to see your company accomplish by the end of the year. While it’s true that not every business owner cares about receiving stellar reviews when it comes time to sell, there are some that do – whether they’re planning on retiring or relocating their business elsewhere entirely.

Focus on Getting More Customers

This may sound like common sense but many companies lose sight of this when their main focus is on keeping customers happy. Getting more customers, in general, can help raise your company’s value tremendously. By putting together an effective sales and marketing plan that includes point-of-purchase material, businesses can not only increase revenues but also build up another aspect of the business that’s just as important: the bottom line.

Even if you don’t believe you’ll be selling your business anytime soon, making changes to make it your own version of a gold mine will benefit everyone involved; whether it’s scaling back operations to prepare for retirement or simply reviewing all aspects of what makes your company tick, doing something is better than doing nothing at all. That said, there are several factors owners should keep in mind when it comes time to sell their business:

– Where is your company located? For example, if you’re in a rural area and want to sell your company based on the amount of traffic it receives from passing through, be sure that you’re not overlooking other factors. This may include being surrounded by multiple real estate options or being within close proximity to an airport for potential buyers who don’t have time constraints to get there.

– What industry is your company in? If you’re a manufacturer looking for a nice return on investment, having a solid grasp of what’s trending in this space will help tremendously. Knowing which types of products are seeing high demand over others can put you ahead of the game when it comes time for seller negotiations.

– Who are your competitors? Knowing who you’re up against helps owners to determine their own value in the marketplace. If you’re the sole provider of a certain type of product or service, for example, having better data on what other companies are offering will help when it comes time for negotiations with potential buyers.

Even if you have little intention of selling your business soon or at all, taking these steps will go a long way towards making sure your company is financially secure and ready to take on any sort of transition that may come away – whether that’s selling off operations to someone else or simply cutting back operations until retirement. The key here is not to lose sight of what makes your company valuable no matter how big or small that value may be.

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First, let’s talk about what selling a business from a position of strength really means. In this scenario, the company is profitable and has been for several years. The most recent 3-5 years have been steady with consistent growth each year. Now most companies do see some downtrends or plateaus, but when talking about selling a business from a position of strength we refer mainly to consistently strong numbers over time. Another factor adding value to your business is the brand name behind the product(s) / service(s) being offered. Perhaps your business is one of the top three in town when it comes to customer satisfaction and your brand image has helped make this happen.

Now that you know what selling a business from a position of strength really means, here are some simple things that may help take you there:

·     Evaluate current assets – From inventory to equipment, all assets need to be evaluated for their market value. When companies are looking to acquire another company, they look at their returns on investment (ROI) based on how much they can sell these assets for after the transaction is finalized. If you have $100,000 worth of inventory in stock but can only get $50,000 for it after the sale is complete… well… you can see where this is going.

·     Conduct some basic maintenance – Cleaning, painting, and overall updates are all factors that increase your company’s overall value. From a buyer’s standpoint, it makes good business sense to purchase something nice and clean versus the run-down version on their own. A few bucks here or there may not seem like much but over time these small investments add up to becoming one of the stronger selling points for your company.

·     Keep an open line of communication with employees – One thing you don’t want to do is come down too hard on employees trying to improve performance in a way they don’t understand or feel comfortable executing. By creating a well-organized system that involves all staff members from the top down, you can identify key strengths and weaknesses within your workforce. Having this information readily available will allow for a smoother transition to new leadership if and when it becomes necessary.

·     Improve customer satisfaction – As we mentioned earlier, building brand awareness and recognition is a huge part of positioning your company as an attractive purchase target. If you’re already doing well in this area let it be known because those who are looking to acquire another company know that these factors play a big role in the overall value of the business they could be getting into.

Selling a business from a position of strength sounds like a simpler concept than what’s used in practice but there doesn’t need to be confusion surrounding them. It all comes down to evaluating your current assets, keeping an open line of communication with your employees, and focusing on the big picture behind customer satisfaction.