You probably haven't thought about selling your business. You might not realize that it could even be a possibility. Your business might be just a hobby or a way to generate important income at the moment.
Things change and one day you might consider selling up and moving on. Perhaps you no longer enjoy it or you have started another business venture? Your personal circumstances could be different or you may end up relocating. Life’s unpredictable.
Not only will these tips help your business grow but if you do ever decide to sell it, you should be in the best position to get the most money possible.
#1 – Always Keep A Potential Exit In Your Mind
If you ever decide to sell, the amount you’ll be offered has a lot to do with the work that done in the months leading up to the sale.
Factors you need to consider are your revenue and your profits, how much traffic your website receives, how big your email list is, how you are generating revenue, and how much work you’re required to put into the business on a daily basis.
Buyers will be dissecting your net profits, and averaging the amount you’ve made over the last 12 months to figure out how much they are willing to pay you. Try and think about this way ahead of time and even if you aren’t planning on selling any time soon, finding out how much your business is worth and analyzing the above is a great way to find areas for improvement.
2 - Don’t Forget Your Time Investment
When a buyer takes over your business, they’re not doing it to create work for themselves. The want to collect the money it earns and probably have an eye on making even more. They’re going to want to outsource whatever work you have to do to maintain the business which is going to cost them money - and reduce their profits.
That means they are going to need to know exactly how many hours you devote to the business each month, along with the types of freelancers or agencies they can outsource that work to.
In most cases, your buyer will go into your deal with a baseline for what they’re willing to pay, in terms of hiring a freelancer. To help them come up with a valuation, you’ll want to give them precise details about how you’re spending your time each month.
Document everything that you do on a daily basis. Figure out how you are spending your time, while working efficiently, and then start reducing the amount of time you spend working on tasks that don’t directly affect your revenue and profits.
This is a great way to work out how you can operate more efficiently and see where you might be wasting time. If you do ever sell, your buyer either won’t have to put in the work themselves, or they won’t have to hire someone to take care of all those tasks for them and eat into their profits.
#3 – Earn Money In New Ways
No matter what your vision for the future, you need to review your business. Step back and look at what you’re already doing to generate revenue, and consider implementing new strategies.
Are there other ways you can generate revenue, without putting in too much extra work?
Have you already started selling advertisements on the site? If you’re already selling ads, can you put up new ad zones that won’t deteriorate your visitor’s experience? Or, can you charge more for the ad spaces that you’re already selling?
If you have implemented Google’s AdSense, can you make tweaks to the advertisements, like the link color, ad sizing, or ad placement to make them more prominent and increase your click through rate?
Have you started promoting any affiliate products? Or, are you selling your own informational products? If not, can you start?
Finding new revenue streams will not only increase your profits but help you diversify. This is always good news for a business owner but it’s also music to the ears of a potential buyer.
#4 - The Money Is In The List
Building a list of email subscribers can be one of the most profitable strategies you can implement. This is especially true if you are selling your own services and products.
Engaged subscribers and customers make it much easier for you to generate new sales and bring back repeat customers in the future.
If you’re promoting affiliate products, your email list can make it simple for you to launch new promotions as your affiliate networks release them.
Even if you’re simply relying on advertisements to generate revenue, building an email list gives you a great way to bring visitors every time you publish something new.
#5 - Trim The Fat, Wherever Possible
One of the factors any buyer is going to consider is how much you’re spending towards expenses each month. This is something you should do no matter what your plans are. It’s easy to keep doing things and keep a subscription going ‘because you’ve always had it.’
Don’t go wild and make the mistake of removing every expense possible, instead take a step back and look at exactly what you’re spending money on, and how each of those expenses affects your business.
In other words, you want to make sure you’re not spending money on things that aren’t needed.
Have you compared your webhost against others in the industry, to ensure you’re getting the best deal? Have you verified that you’re not using an account that’s more expensive than what you actually need?
If you’re paying for advertisements that have quit performing, you’re essentially throwing money out the window.
If you’re paying for subscriptions to services that you aren’t using on a regular basis, consider cancelling those subscriptions to save money.
If you work on dwindling down your expenses, you’re going to see an increase in your profits.
#6 - Detailed Records
If you aren’t keeping detailed records, start now. Keep monthly records on your business’s performance, how many visitors you’re getting, how you’re generating revenue, how much revenue you’re generating, your expenses, email subscribers, and time you spend working on tasks directly related to the business.
Having factual and accurate data is the best way to make informed business decisions. If you don’t know what is going on and how things are changing, how can you make improvements?
If you ever prepare to sell, you’ll want to ensure that you have accurate, detailed records about every aspect of your business. A potential buyer will want to dig deep into the business they are spending their hard earned money on.
You’re also going to want to include lists that document the services you’re spending money on, and how those services are helping you (or not) from month to month.
#7 - Understand Your Motivations and Reasoning
You started this business and hopefully, over time, it has grown and evolved. Even if you intend to continue running the business for the next 20 years, it’s important to take a step back and look at where you’ve come from and where you are going.
Is the business growing? Do you want it to grow? Is it still something you love? Or do you dread going to work?
Be honest with yourself about your business and what you want from it in the short, medium and longer term. Write it down or discuss it with friends, family and confidants if it helps.
You need to keep in mind what is important to you and your future goals. There may come a time that your business doesn’t fit with them any longer. It’s better to make a structured exit and sell the business for a profit rather than letting it die a slow death.
If you do ever start talking through a deal with a potential buyer, they’re going to spend quite a bit of time asking questions about how you’ve built the business, where it’s at today and how it’s run. Regardless of the reason you decided to sell, being able to articulate that is going to be critical to maintaining their confidence and keeping any potential deal moving forward.
Whether you’re thinking about selling your business, or want to make sure you’re prepared for the possibility in the future, now is always a good time to think about changes and improvements.
By thinking about the above, you can not only make positive changes to your current business model but also position your business as a more attractive proposition to potential buyers if you ever decide to sell.
Author: This post is written by Jock Purtle. Jock is an Australian living in sunny California. He is a successful internet entrepreneur and business broker.