Most business owners looking to sell their business have one of two goals.
1. Maximize value for sale
If you’re planning on selling your business, it’s obvious that you’ll want to maximize the value of your business. You’ll need to manage your operations for value. You’ll need to ensure that the business is poised to operate without you.
Occasionally, people come to business advisers looking for short-term, “crisis” measures to shore up their business before a valuation. This misguided approach is unnecessary. There are a variety of steps you can take to get the most out of the sale of your business. These are the sorts of things you should be doing anyway, since they’re all focused on creating long-term value.
Existing contracts and long-term customers are critical to the overall health of any business; they are also important when valuing the business.
One of the major concerns of every small business owner, cash flow is also a major factor in valuing your business. Another thing to think about is how you plan to maintain sufficient cash flow during the transition.
Diverse customer base.
Obviously, not all your cash flow should be wrapped up in one big client.
Retention of Employees
Particularly in a small business, employee retention post-sale is critical to the business’ success. Oftentimes, key employees hold a great deal of intangible knowledge, particularly if they’ve been with the business for a long period of time.
There’s a reason these things seem incredibly obvious to you–it’s because they coincide with your existing goals as the business owner. The good news is that you can relax.
2. Transfer to heirs with minimal cost.
If you’re planning on leaving the business to your heirs, you face a different set of challenges than someone selling their business.
Regularly value your business.
This is a key part of the planning process. Your business value is a benchmark by which you can plan your exit strategy.
Be careful gifting interest to heirs.
With multiple family members involved in the business,
Consider family roles
In most family businesses, there are a few roles that just aren’t fitting as well as they should be. The wrong person, the wrong job–it happens.
Choose the right team.
There’s a reason we tend to discuss this subject repeatedly. Anyone looking to transfer or sell their business absolutely must have a group of experts working in tandem. Entrusting the future of your business to a team is big commitment. If you look at how much time you spent considering all possible sides of the issue on much smaller matters, you might be inclined to look a little more closely at what you’re doing here.