I recently co-hosted a webinar in which this topic was discussed. An acronym often used in the law enforcement/military community is “The 5 P’s.” Simply stated, “prior planning prevents poor performance.” When is the best time to prepare an exit strategy and sell your company…the day you started your business is the best answer. Not all business owners have a long-term vision or strategic plan in place for this to happen. Keep in mind, selling your company is a process, not an event. Three types of business owners we have dealt with:
1) an entrepreneur looking to flip her business(s) within 3-5 years;
2) a business owner looking to sell within 7-10 years and has an exit strategy;
3) a business owner motivated to sell his business, with an exit strategy, while leaving a legacy and possibly having a succession plan.
So where do you get started if you are Owner #1 or # 2? You contact Valhalla Business Brokers where our team has your goals and best interests in hand. You have to make your business attractive to all buyers, but only to one buyer who is willing to pay or at least negotiate in and around your asking price. Realizing the sale will be a process and not an event allows you to have people, processes, technology and capital in place. Of these four elements, people are the most important. You must have the right people in place so you can sell your business. You have to be replaceable otherwise why would you sell your business? Will key employees stay? Are customers loyal to the owner or the brand? Ask yourself if you can go to Bora Bora for two weeks and your business operates successfully without you.
Processes to obtain goods, manage operations, improve profits and sales in good times and bad, i.e., Covid-19, are in place, functioning and predictable.
What technology do you have in place to keep operations going? Does your company have an IT/SEO representative/employee to fix IT issues and maximize your technology functions?
Finally, investors and/or buyers of your company want capital from the purchase and also to generate capital after the sale. A broad customer base, recurring revenue and a business which is scalable creates capital.
With the five P’s in place, a sixth P—Prosperity, can be added with the successful sale of your business by Valhalla Business Brokers.