Set your business up so that someone will want to buy it

The eternal hope for most  business owners  is that, at some stage, someone will come to them with a big bag of money and offer to buy them out. After all, this is the reward for all the hard  work,  stress and financial  risk they have taken on.

Setting up your business so that someone will want to buy it involves  looking at your business  from the perspective  of a prospective buyer from day one. What are prospective  buyers looking  for? The obvious  answer is that they want to make  a return on the money they plan to invest in your business. In many  cases, though,  there are other factors to consider  as well. Sometimes people are looking to buy a lifestyle; sometimes they just want to stop working for other people and are content to make a reasonable income;  sometimes they want  to eliminate the competition.  Whatever their motivation, you can make your business more attractive by planning ahead.

There are three  main ways to increase the appeal of your business, regardless of its size, to potential buyers:

1.    Show that your business is built on solid foundations.  This can be achieved by having a business plan and a marketing plan. Even if they are only simple and straightforward, it shows that you are building  your business in a strategic  way,  not just a haphazard  way.  Having customer testimonials,  and even  supplier testimonials,  about your business  is  also advantageous because they show that  you are good at what you do. Prepare simple graphs that show how the business has grown  in the past. These graphs can include  turnover, number of customers, after tax profit, and even the volume of goods that you buy to resell. All of these graphs should show increases.

2.    Have a clean business slate.  Make sure that your tax and business records are up to date  and accurate, and that any issues with customers  or suppliers  have been  resolved.  Ongoing disputes  can make your  business less appealing.  Ensure  that legal documents  are filed as required,   and  that things like leases are all in order and current.

3.    Show the potential of the business.  This is the key area that prospective buyers are looking for. Are there ways to increase the amount of business and the number of customers in other words,  is there  potential  for growth?  This can  be achieved showing  industry trends,  local business  activity for your region, the degree  of customer loyalty  (do your customers keep coming  back?), and continued growth in your turnover (or at least consistent profits). The prospective buyer will have their own reasons for wanting to buy your business and they will tend to have their own ideas about where the potential of the business really lies. You are simply pointing out some of the attractive features of the business that they may not have considered.

There are, of course, other factors that are important, and this is where  your accountant and legal representative come into play. Some buyers won’t be interested in any of the above; they will want only to see your  profit and loss statements.

From my own experience,  and that  of successful  business people  I  have  discussed  this subject  with, planning   ahead for the day you sell your business and building this into everything that you do will ultimately  pay off at the crucial time.

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