Buy before you sell – a small, profitable business is good. A mid-sized, profitable business is better. A larger company attracts more buyers who have more skills, more money and who are more serious (to make an acquisition). Many of the red flags a buyer sees are less common as (well run) businesses get larger. Consider buying a competitor, supplier or customer as part of an exit strategy. Showing that your company can successfully integrate another firm into yours gives a buyer confidence that the culture for growth is in place.
Customers – The more diverse your customer base, the less concentrated it is and the more contact you have with your customers the better, stronger and more appealing to a buyer your business is. Sounds simple, but in real life the day-to-day tasks often get in the way of the above. Too often we see businesses with a few customers who dominate annual sales, too many customers in the same industry (so if that industry suffers so do you) and no regular contact program with customers other than filling orders. Often I hear from business buyers that one of the first things they do after transition is to implement a customer contact program. I hear about this because they tell me how well it’s working and how happy the customers are to hear from them on a regular basis.
Delegate – Control is one of the reasons always given by people who say they want to own a business. But control should have its limits. One of the biggest red flags to a buyer is the business that is extremely dependent on the owner. It doesn’t matter if it is his or her technical skills, sales abilities or just that they know how to and actually do “everything.” Build a team. I remember when a client told me they went to New Zealand for three weeks, pretty much forgot about the business and when they returned it was as good (they said better) as when they left. Give your team responsibility. If they make mistakes and learn from their mistakes your company is all the better because of this.