Selling Off Your Business
When you start a business, it can be hard to think of the day that you sell it off. However, planning for succession is the best way to ensure that you come out on top when that day does come. Keep these business succession planning tips in mind to help you get your exit strategy ready.
- Many company buyouts will require a multiyear agreement and tie the compensation to a specific customer retention percentage. In order to make sure that this succeeds, it is important to keep a good line of communication with all of your clients. Customers want there to be a seamless transition and that the product or service that they will be receiving will stay the same.
- Become serious about knowing and understanding the true value of your company before you look to sell. Having an unrealistic idea of what your business will sell for can lead to broken deals. Know what you have to offer customers and how you are set apart from other businesses in your field.
- Figure out if you should set the value of your business on recurring revenue or on assets. If you have a service based business, you are better off valuing your business on revenue, since you may not have very many hard assets. Manufacturing businesses have a better chance of valuing their business on assets.
- Mentor the future buyer about what they should expect when they take on your business. Work with local trade organizations or universities to help start relationships with people who are interested in what your business is.
- Have a solid understanding of your business’s customer cost and profitability and the systematizing efforts that will help to drive down the costs. The more you can tell your buyer how to be successful, the better deal you will be able to make.
For more tips on planning for the next step with your business, contact Phocus Companies in Phoenix, Arizona.
