Many successful entrepreneurs wish to accomplish their dream of growing a business rapidly and then exiting at a profitable point. However, budding entrepreneurs often do not realize the complexity and risks associated with this process. Here are a list of things to consider:
Whom to sell?
A wide range of options are available when you are think of selling your business: –
- Trading with an interested individual in the market on your terms and conditions
- Giving possession to a family member or new generations of the family makes the transition smooth and hassle-free.
- Selling to partners wherein you had already signed on a buy-sell agreement, which has a previously determined price and procedure outlined.
- Large businesses buy smaller ventures with the idea of expansion.
Steps to sell your business
Every businessperson has his own experience in this whole journey[1], but the actual procedure remains the same. Here are the points which one should consider when they are thinking to sell off their entities: –
- Estimating the company’s worth
Hiring a professional to calculate the assets of your company is a great way to start. Their analysis will reveal the actual position of the company, its debts, risks associated with them, future aspects, and everything.
- Improving the standard of business
Increasing the efficiency of the business operations and maintenance of different units will make potential buyers interested in your business set up. A well-managed system will leave a positive impact on the new owners.
- Debt-free finances
Any prospective buyer is interested in the system, which has clean and clear funds. A well-updated history of account statements and business books would always help raise the worth of your asset.
- A pre-planned exit strategy
A business has its risks and failures, and an entrepreneur should always have a plan of action ready in advance. This helps to avoid sudden critical situations and a disrupted system. Leaving the business at a good point is a better idea than exiting it at an end where it is not able to flourish.
- Preparing a selling memo
Before selling, develop a good description of your business, highlighting all the strengths and future projections and financial information.
- Hiring a broker
A wise step to sell your business, without exposing it to the vulnerability of the market, is hiring a broker with an excellent networking circle. Various websites provide help to people who don't want to indulge in the broker buyer relationship. There are advantages, such as helping in simplified negotiations by facilitating and turning conversations in the right direction. Business brokers have substantial experience in creating documents such as NDA (non-disclosure agreement) or CIM (confidential information memorandum). A broker also helps to save you formidable amounts of time while providing an expert opinion. They can simplify the process by taking some of your chores and responsibilities. The disadvantages would be a conflict of interest. A good broker is hard to find. You might land up paying a high fee to hire one.
The sale of a business can be a profitable option, but only if you chalk out your plan wisely. Be confident in passing a robust business model to the next owner. This creates a comfort zone from where you can manage your next moves easily. After all, it has been your dream for a considerable time, and you should make sure to make it someone else’s reality.
Business objectives that you should know to become successful.
Pick the right business.
You need to have a positive impact, and change the way something is done, for example, take into consideration famous personalities like Oprah Winfrey or Bill Gates, how did they reach their success in business? Although making money is essential, it's not primary when you are about to start a business. You need to pick the right company and be passionate about what you are doing.
Pick the right plan
Many entrepreneurs sketch out a perfect plan; it's got to be a hundred per cent accurate. You need to know precisely what they are going to do before they launch their business. They begin to start visualizing how they are going to grow and where they are going to head. Here's what happens as soon as they launch their business, things change, it then turns out that their plan was wrong, their assumptions were incorrect. So don't get too caught up and focus on making the perfect plan instead, the best thing you could plan a little and then start. When you get feedback, reaction and customer reviews, you will have to adapt anyway. So concentrate on obtaining feedback as soon as possible. Don't worry about the perfect plan or rather don't wait until you have the money-spinning idea. You will end up waiting too long, leaving you with various missed opportunities. You need to understand that you will not have the perfect plan at the start, so go ahead and make a start with customer and market views.
Spend money
So many entrepreneurs have great ways to spend money, like if you have a million dollars you have a million different ways to spend it. Not many entrepreneurs are good at making money, hence saving money should be the priority. You do not necessarily need any infrastructure like -business cards, cars, offices and others. You need yourself and the motivation to hustle in front of potential clients and start talking to customers. Don't hold onto the thought that you need money to make money. It takes your time to go out and talk to people. Invest time and think of low investments of money. Start spending money only when you begin making some money.
Trying to do it alone
You cannot be an entrepreneur standing alone. You need people to help you- volunteers or interns, or people working for you part-time. Have a mastermind group of people that you connect with to meet or discuss every month, talk about your businesses and bring out a brainstorming session. Here you are not spending money to start; you need to attract people to you. Start by not trying to do everything yourself. Running a business is a lot harder than one person managing the show. To grow, businesses need to employ people and earn return on the capital employed. This human resource is going to be one of the best criteria on which you can sell your business later.
Jump in the wrong partnership
So many startups and entrepreneurs jump into partnerships. It's quite common to think that you want to gel with people who have complementary skill sets, and onboard them with your big vision and so on. Suddenly things get tough, and that's when partnerships start to crumble. This is when lots of arguments start to happen. Being in a business partnership is just as important than being in a marriage. You need to choose someone who has the same value as you. The right thing is to try working together on small projects before jumping together into partnerships. By doing this, you will be able to analyze if you get along together or work well or even share the same vision. It is much more than just having complementary skill sets.
Operating in a bubble
We get too busy trying to do everything ourselves, but the truth is we fail to invest in ourselves. You cannot operate in a bubble you have got to burst through your comfort zone. Learning from others, watching videos, reading books, stretching your comfort zone, stretching your knowledge zone is the first and last pillars of growth.
[1]https://www.fundera.com/blog/selling-a-small-business