- Create a recurring revenue model. Businesses that have a recurring revenue model are easier to sell than those where new revenue sources (i.e., customers) must continuously be found. I agree completely.
- Become a passive owner. Get yourself out of the day-to-day operations as much as possible to increase value to potential buyers. If you are no longer deemed essential to the success of the business, a buyer can more easily see themselves being successful after the sale. In my experience, becoming entirely passive is a lofty goal for most small businesses, but you can make yourself less critical if you focus on this years ahead of a sale.
- Consider who the right type of buyer might be. Is it a competitor, an individual investor/operator, a private equity group, a public company, etc. You will need to produce all the information needed by potential buyers. Different types of buyers need more of certain types of information. You also need to determine what information is truly “sensitive” and develop ways to protect it in the sale process, especially when the buyer is a competitor. Experienced business brokers and M&A advisers are expert at this.
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