Are you building a ‘sellable’ business?
This question was first posed to me over a decade ago by one of my first business mentors.
Whether or not you intend to sell your business, you should be building a ‘sellable’ business.
In doing so, your business will be far more efficient, far easier to manage, and will have much greater growth opportunities.
What are the things in your business today that would make it unattractive or difficult to sell to any potential buyer?
Once you identify those things, you will have to proactively make those a priority and work to solve those issues.
These were the three things we identified and ultimately fixed. We had to:
1. Start collecting the right data
We were feeling our way through every decision and using ballpark numbers rather than real data. We realized that this was causing us to lose profits and miss opportunities.
Immediately after we started collecting and regularly reviewing the right data in our business, we found that we were letting profits fall through the cracks and missing opportunities because of the murkiness of data.
Collecting the right data helped us identify ways to increase our cash flow and profitability.
It also created a new way of making decisions in our business. We became far more disciplined and intentional than ever before.
Lastly, now that we knew our numbers, we could confidently share those with any potential buyer.
2. Stop using workaround solutions for inefficient systems
Entrepreneurial businesses move fast. This helps to fuel growth but also creates unnecessary complexity and inefficiencies over time.
In the short term, it’s always easier to use the ‘band-aid and duct tape’ approach and simply deal with these inefficiencies so you can focus on growth at all costs.
Unfortunately, this approach is extremely costly to your business in the long run and makes it extremely unattractive to any potential buyer.
Start by identifying the parts of your business that you’re using workaround solutions to account for inefficient systems, and invest the resources necessary to build the right systems for your long-term success.
In addition to building a more scalable business, you’ll find that you can now delegate and train almost every part of your business, which will free you from the broken parts of your business that you’ve been stuck dealing with.
3. Remove the dependence on specific people to fuel growth
We realized that our clients didn’t have a relationship with our business, they had a relationship with specific people in our business (specifically myself and my co-founder).
I was the first and only point of contact for many clients, which meant they would call my cell phone and email me directly for anything they needed.
And while this client relationship was instrumental in our early growth, this eventually meant that I found myself tethered to almost every aspect of the business, which was preventing our ability to grow.
Eventually, we placed an emphasis on transitioning the relationship with our clients to our business, rather than any individual. We would use general support email addresses (i.e. email@example.com and firstname.lastname@example.org). We stopped giving out direct numbers and had all calls come into a general phone line and route to individuals. We would always refer to our sales team or support team, even if it was a one-person team.
The truth was that during the transition I was still handling a lot of low-level tasks, but our customers felt a sense of gratitude when I was working with them, rather than feeling like they were getting second-class service if someone else stepped in.
Once the transition was complete (it took about a year) this allowed the leaders at the top of our business to delegate almost everything that involved customer interactions so we could focus on building better systems, products, and team members. Our time was finally spent proactively in our business rather than constantly reacting to customer needs.
Get together with your leadership team this week and ask “What are the things in our business that would make it unsellable, or unattractive to a potential buyer?”
Spend the next quarter fixing those things, and you’ll find your business in a much better place for profits and growth, regardless of whether you ever intend to sell.