It is not comfortable to think about it, but there will come a day when you want to end your entrepreneurial journey and sell your business. This could be due to circumstances beyond your control (such as a pandemic), you are ready for a new challenge or you have had enough and want to retire.
However, selling a business is not something you do 1-2-3. It is different from selling a piece of clothing or interior decoration on Ebay. There are dedicated business for sale in Europe websites, but you will need thorough preparation in order to make a satisfying exit. Experienced takeover advisers indicate that the optimal preparation for a sale is up to three years for most European companies. This also applies to sole traders and SMEs. Perhaps especially for those small entrepreneurs. Because we see that these types of businesses, think bakeries, hairdressers and nail salons, their functioning is largely dependent on the presence of the entrepreneur in question. It takes a lot of time and strategic decisions need to be made, to make such businesses marketable.
But even if you are not planning to dispose of your business in the short to medium term, it is worthwhile, to heed the advice given in this article. Many of the things that are important to take care of for an acquisition are actually areas of improvement anyway that you, as an entrepreneur, want to keep yourself busy with in order to scale and prosper your business.
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Takeover tip #1: curb your own role
As indicated earlier, many smaller companies in particular are still too dependent on the founder’s input. So how can you reduce this dependency?
One of the most important things to start with is to create so-called SOPs. This stands for Standard Operating Procedures. In layman’s terms, we can say that you want to create manuals for employees (if applicable) and/or for the new owner. All key business processes you want to accurately capture in these documents.
If you want to scale a business, this is crucial anyway, because you cannot do everything yourself. You will need to hire employees, who will need to be taught. And that’s what SOPs are for.
If you choose to hand over the business to your son or daughter, it is advisable to first let the son or daughter work in the business for a few years before handing it over. This will allow important customers and suppliers to get used to the new owner.
Takeover tip #2: just keep innovating and investing
This is perhaps the most counter-intuitive tip, precisely the years before a proposed takeover you want to invest in your business and preferably innovate. Potential buyers are mainly interested in what your company can do in the future.
By stopping investing in machinery, the premises, among other things, you fall behind competitors and prospective buyers will definitely notice this and that won’t do the company value any good. Anyway, even if you don’t want to get rid of your business in the coming years, even then you obviously want to gain, build and maintain an edge within the industry you are in. This is especially true for online businesses for sale.
Acquisition tip #3: aim for as diverse a clientele as possible
Business buyers are wary of companies that depend on just a handful of customers. Suppose one of these customers disappears, the company is a lot less profitable in one fell swoop. But if you think about it carefully, even if you are not about to sell the business yet, you don’t want your business to be in risk if one of the customers cancels or no longer wants to use your products and/or services for whatever reason.