Preparing Your Business For Exit is Just Good Business Strategy
As I walked my eldest daughter into her first day of school, her tiny little hand in mine, her new shoes, and adorable lunch kit, I had a thought. It was a realization that there really aren’t that many of these moments before we reach her last first day of high school.
At this moment in time, that final first feels impossibly far off.
But the truth is, if I’m lucky, I’ll only get 13 of these with her.
The end will be here before I know it.
It’s not necessarily something I’m preparing for right now, but once it’s here, I’ll need to be ready.
Ready for her not to reach for my hand.
Ready for her not to need me to walk her into class.
Ready to help send her off to college.
At some point, just like my little girl's first days will end, so will your time at the helm of your business.
Where you sit today, exiting your business may be a far off thought, but it’s important to see that one day it will be a reality. Even if your exit is 20 or 30 years away, there are things you can do today that will radically increase the value of your business in the here and now, and when it’s time to exit.
Here are 3 ways to prepare your business for exit and increase its value today.
Create a strong, vibrant company culture
Every business owner understands the importance of a strong culture, many believe they have one, but fewer invest heavily in developing that culture. Culture is not a passive action within your business. It’s something that must be defined and set by the leadership, communicated regularly with employees, and invested in by the business. Great cultures don’t just happen, they take time.
Peter Drucker wrote, “Culture eats strategy for breakfast.” And in his book Good to Great Jim Collins talks about the importance of getting the right people on the bus. Hiring people that match your company values is a great way to ensure that your culture will grow as the business grows.
Set strategic goals and execute with excellence
SMART Goals are a technique for setting goals that are Specific, Measurable, Achievable, Relevant & Time-Bound. Businesses that set goals like this know where they are headed and how they intend to get there. Defined goals allow everyone on the team to move in the same direction towards achieving these common goals.
If you’ve built a company based on your strong culture, and hired the right people, you’re in a great spot to chase these goals. A team that is bought into your company culture, and ready to steer the ship together, will be even more successful when it comes to chasing the goals you set.
Diversify your customer base
Typically, your buyer will be looking for less than 20% of your revenue coming from any one customer, so it’s important to diversify your customer base. It also takes pressure off your company when you’re not fully reliant on one large customer. What if the relationship sours or your clients' needs naturally evolve?
Consider tasking the members of your team to brainstorm some creative ways you could diversify your current market. More often than not, a member of your team has already dreamed up the creative new market you’re looking for and they are just waiting for an invitation to share.
Focusing on the things that make your business attractive to a potential buyer is how you add value to your business today and create a stronger business that frees you up as the leader.
Even if the question you’re asking yourself is not currently, ‘How can I get my business ready to be sold?’ ask yourself the following questions:
What is the current culture of our business? How can we develop that even more?
What are our goals? Are they clearly defined?
Are we too reliant on a single customer or market?
If you’d like some help on how to evaluate and improve these areas, we are here to help, feel free to reach out.
