Could You Sell Your Business? Here’s What You Need to Know

Newsletter · Sep 15, 2024

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An entrepreneur's recipe for sweet success

2min Read

Hop in your DeLorean, get that baby up to 88mph and let’s take a trip to the future life of Reader, you.

You’ve either bought a business OR you’ve started one. Congrats, you’re crushing it!

In this future, successful timeline of yours, someone just emailed you and inquired whether you want to sell your business… 🤔 woah. This is big time!

Let’s play this out here.

While this might not be something that you’ve ever considered, the idea makes you curious.

What would that even look like? What would you do next? How much is your business even worth?

Often times SMB peeps think about this sooner or more regularly than founders do.

In the SMB world you’re coming into a business through acquisition, it makes sense that at one point YOU might consider being on the other end.

As a founder, the business is your baby. You’ve created something from nothing.

It might have even been a passion project that turned into something more. This might be the first time that you’ve even considered the idea of selling.

Either way, regardless of the background you have with acquisitions, in this hypothetical future timeline we’re talking about today, you have a business and people want to buy it….

So let’s examine some big topics here:

It doesn’t matter whether you ever plan on selling. That’s not the point. The point is that if you build your business with the idea of future buyers paying top dollar in mind, you'll build something amazing.
The same things that makes a business highly sought after by potential buyers are also the same things that make the business BETTER. Whether it’s a future buyer or its YOU, doing these things to your business will only help you.

This leads to the BIG QUESTION:

What are the variables that you can build and/or improve in your business that will make it as valuable as possible in the future?

And here are the answers:

This is the cool thing; There is SO much data on acquisitions and what buyers are looking for that all you need to do is reverse engineer the most popular variables and implement them into what you have.

Check it out:

Source: Private equity buyers survey, Pepperdine Capital Markets Project, 2023

Source: YPO Mergers Acquisitions and Strategic Transactions

So what’s the common theme here through all of this data?

It boils down to 4 things in my mind

1. Customer Diversity

2. Historical Growth and Profits

3. Management Independence

4. Operational Excellence.

Awesome. But what does that look like for you right NOW?

I realize that’s a lot to digest, but this is really the road map to building something of substance.

This isn’t just what private equity is looking for in businesses to acquire, these variables are what make a business stand up on its own and LAST.

Customer Diversity: You don’t want all your eggs in one basket when it comes to customers. If a small percentage of customers provides a large percentage of revenue, you have a problem.
Historical Growth & Profits: So you have one good year, but can you have two? Three? Five? Running a business is hard, but if you can show consistent growth, you know you’re doing something right AND you’re in the right industry.
Management Independence: A great playbook for this is Michael Gerber’s E-Myth. The famous line is you don’t want to work IN your business, instead you want to work ON it. That’s not always possible, but the idea is that the business can get to the point and with a team, to run without you so that you can be focused on growing the business.
Operational Excellence: This flows along side of your management team. How well do you have systems, SOPs and procedures in place? Can you hand that playbook to someone else? Are you tracking the data where you’re able to determine the dials you need to turn to produce results? If systems are clearly implemented, the results or lack thereof will be apparent.

None of this will happen overnight, BUT these are the variables to keep in mind.

These are the ones that will help build your business to a level of success and for buyers to be banging down your door regardless of whether you actually want to sell.

Build NOW with the future in mind.

If you have a business idea in mind or maybe one that you're looking at buying and want to game plan what steps you should take to make it happen, I'd be happy to hop on a call. Let's figure this out!

Until next time...

Stay in the fight,

My best tweet of the week:

@kevinasrx

Sometimes there’ll be “leaks” in the business or project that you’re working on.

Before you get carried away with a complicated solution, start with the basics.

It might just require tightening one tiny little screw like I show here. 👇

5:11 AM • Sep 10, 2024 ↗

My favorite tweet of the week:

@mhp_guy

I've started over 20 companies & collected over $100M in profitable revenue.

I use 1 system to identify what business to start.

The BO framework:

2:34 PM • Jan 19, 2024 ↗

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