There are many reasons why people might choose to sell a business. Sometimes, they don’t have enough time to continue investing, are ready to cash out, or simply have decided to focus on other parts of their life. Even when someone is not quite ready to sell their business today, it’s crucial to have a structure in place for doing so and this will greatly improve the day-to-day operations.
It’s much more difficult to make substantial changes the further along a business develops, so starting off early on with the proper structure is crucial. A few other reasons are to start now is it will net a higher valuation for any business when the time comes to sell, save lots of time and frustration, make any business less stressful to run and operate.
Structure For Exiting A Business: 5 Key Factors
There are five essential factors to consider before selling an online business and all of these can be implemented regardless of the stage and it should be relevant for the majority of businesses valued under $10 Million dollars.
1. Automate, Outsource, Or Hire (In This Order!) To get started, assess and audit every aspect of a business to determine which of the following categories is possible with the following order: automation, outsourcing, or internal hiring. Every business has inefficiencies or areas where the main owners can focus more on growing their business and less on spending tons of time taking care of everyday tasks that could be easily automated. When exiting a business, having tasks heavily automated will make the transfer of management a breeze. A lot of times, entrepreneurs don’t fully grasp how easy and cheap it is to automate important tasks. In most cases, it’s best to consult with automation experts once every major task has been clearly outlined and audited.
Sometimes, though, specific tasks might not be possible to automate, or potentially too expensive or complex. Outsourcing is an option in these instances, but business owners need to be careful to get help from the right people and make sure they are vetted thoroughly. It’s essential to outsource based on their skill set, experience, and overall payment expectations.
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When all else fails, having full or part-time employees on the line will be the best way to prepare for selling a business. The employees hired will be the ones that are on the ground running the business day in and out. This is why it’s important to always be on the lookout for trustworthy and skilled people that will help add value to a business and make it run without any micro-management required.
2. The “Vacation Test”
One of the best ways to stress test a business before selling is to do what we call “vacation tests.” Think of things this way: as the executive, it should be no issue to head over to Hawaii for 2-3 weeks and leave the phone and laptop at home. A fine-tuned business should be able to continue running if a few people take a vacation without issues.
The same goes for anybody that works for the business. If they can’t up and leave for a few weeks without the business running into emergency problems, then this business needs to restructure things with cross-training, standard operating procedures (SOPs), and other vital factors before considering to sell the business.
3. Shiny Objects Syndrome
A lot of entrepreneurs fall victim to “shiny objects syndrome” where a competitor or fellow business owner is adding new services or hopping on the next business fad. It’s vital to know when to innovate and when to avoid a fad or the next shiny object. A lot of times, these will only be distractions that take away from a businesses’ core offering.
Most businesses need to focus on are the things that are working and already bringing in the primary profit. Consumers are constantly facing options overload, so consolidating the offers and services provided can net a business much more profit.
Often times it does take a bit of testing to find the big winning product or service, but once this happens make sure to go all-in on it until it is completely saturated and then worry about adding other products or services.
4. Buyer’s Perspective
Business owners need to try and keep the perspective of potential buyers in mind before selling an online business. Savvy financial-minded buyers will put in lots of research into buying a website or online business before making an offer.
Therefore, it’s important to focus less on painting a perfect picture that might not actually have a basis in reality and instead focus on how to be transparent yet still attractive to buyers.
Buyers will need access to things like the SOPs, all financial records and data, and so on. This way, they can take the keys and continue where the business left off without a steep learning curve.
Before selling an online business, focus a lot on streamlining all of the operations and organizing the data and SOPs. This way, any buyer who comes to inspect the business will instantly see what the business is all about, what they need to do to run the business, and how much they need to pay to buy.
A lot of times, entrepreneurs paint a perfect picture of their business, but transparency is essential and a lot of savvy buyers do not want to acquire businesses unless there are areas that are underoptimized or have large growth potential.
5. How To Sell?
The art of selling an online business is something that needs to be taken seriously. First, it’s essential to determine how much your business is worth. Then, the next step is to find the right buyer for the business. Finally, negotiate a win-win price with them and prepare everything to transfer the business.
Although this sounds really easy on paper, this is a significant financial decision for any entrepreneur and the buyer. Oftentimes, selling a business is the largest financial decision for any entrepreneur.
Seek The Help Of Experts
Due to the importance of the decision to sell a business, it’s vital to seek out the help of experts in the industry of buying and selling businesses! They can help make all the barriers and aspects that are unclear in selling a business much more streamlined and greatly reduce any risks. The best experts will save lots of time, increase the net amount for an exit, and greatly reduce risks and stress for selling an online business.