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Want to Sell Your Small Business Someday? Five Strategies to Implement Now.

AJ Drexler
February 12, 2024

What’s your five-year plan? Ten-year? Twenty? More?

It’s easy to say that nothing lasts forever, but planning for that reality takes a little more finesse. No, this isn’t a doom-and-gloom post. Instead, it’s all about getting the most from your business’s next phase. Whether you want to sell, be acquired, enter a merger, take on investors, or hand down to a family member, trusted partner, or employee, there are actions you should get started on today to prepare your business for tomorrow – no matter how far down the road that is. Start with these five strategies.

Identify your business debt strategy

If selling your business or being acquired is in your big-picture view, consider the type of debt you have already or that you take on in the future. Long-term debt is typically deducted from your EBITDA number, which will directly impact the value of your business. Short-term debt, such as emergency loans, usually isn’t taken into consideration.

Ensure you're keeping detailed records

I can’t stress this one enough, keep stellar records. Hopefully, you’re already doing this (Entrepreneurs Forever members, I know you are). Proper record-keeping is essential for the due diligence process of any sale, merger, acquisition, etc. Document everything, from the value of your inventory and investments to debts and business and personal expenses, and have this information ready to go and up-to-date whenever needed. Also retain signed contracts with employees and hold onto (or ensure you have access to) at least three years of income statements.

Build strong relationships

To attract potential buyers or partners, focus on networking. Long before you’re ready to sell, be sure you open up relationships and have conversations with strategic individuals. These, BTW, may not be the buyers but they may be people in a buyer or investor’s network or sphere of influence. Building relationships with suppliers and vendors is beneficial too. Retired individuals in your area who are avid customers may also be interested in acquiring your business as a retirement business. Also remember that making connections can help build your current customer base, too.

Understand what impacts your cash flow

Businesses do not go out of business based on their value as much as they go out of business based on cash flow. Your plans likely aren’t to go out of business – so ensure you always have a handle on cash flow. Understand how actions you take will impact cash flow so you’re prepared and also look for ways to grow your business’s value. 

Identify market trends for timing

In real estate, location is everything. In business ownership, timing trumps all. It’s crucial when you’re selling a business. Learn to identify market trends and conditions and be proactive. You’ll ultimately want to sell your business just before it hits its peak – not after.

Prefer to Buy, Not Sell? 

Looking for a good opportunity to acquire profitable businesses? The time may be now as baby boomer-owners are looking to sell. Some of the businesses may not be glamorous. But that’s okay and sometimes preferable, particularly if the business or industry is stable.

Are you an Entrepreneurs Forever member?

Discussions with your peer group can help you stay up to date on local market trends and networking and may help you find the right buyer or support team when you decide it's time to exit your business. Not yet a member? Learn more about joining us.

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