How to Start a Business with the Intent to Sell
How to Start a Business with the Intent to Sell
Imagine if we could run an experiment in parallel universes with two sets of identical people who are starting the same business in the same markets on the same day. They have the same opportunities; they have the same starting resources and the same initial abilities.
The only difference is that one of the business owners begins with the intent to sell, while the other allows fate and sees how it goes to be their guiding idea.
If we fast-forwarded 10 years and had a look at the progress of each business, Do you think there would be a difference?
In reality, we will never know the answer but as business owners thinking about this, it does force us to ask ourselves a different question.
Why wouldn’t you start, buy or operate a business with the intent to sell?
The fact is when we build a successful business, we should also have built a valuable asset that has produced income over many the years as well as something we can sell.
What most business owners fail to do is realise the full value of their assets. This ‘failure to realise’ is due to their business not being built in a way that allows the true value to be unlocked. This is such a waste after going through the journey of building a company.
So how do you make sure that you don’t miss out on realising the value of your asset when it comes time to sell a business?
The first thing to do is at the beginning is clearly understand who would want to buy a business like yours? Who has acquired businesses like yours before and why did they buy them? Once you understand why businesses like yours have sold you can then work out how potential buyers valued these businesses. We call this knowing the key value drivers.
You may be asking why do I have to worry about this from the start and can’t you just figure it out later? The answer is simple: because you should always be looking to maximise your efforts and resources when building a business. Day one is a good day to begin this habit. You may also find that undoing parts of your business can be very costly down the track. It costs nothing to be well informed from the beginning… just a little effort.
Once you understand the key value drivers for the asset you will find decision-making, strategy and basically every function of the business easier as you have a guiding light by always asking does this add or detract from the value of my business if I was to sell?. Having an understanding of the end game changes how you will operate.
Simply build a quality business that becomes a valuable asset. Do this successfully and you will not only have created a great business but have an asset you can sell and reap the rewards of a job well done.
Tags: selling coaching small business success entrepreneurs
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