I talk a lot about buying businesses, but in this article I want to talk about how you should run a business if your intent is to sell it down the road.
Here's a question I recently received on this subject:
I?m in the early stages of building my business, the third year, and I?m building it with the idea of selling it to someone down the road. What should I be concerned with as I build my business to make it attractive to a buyer down the road??
The first two things that make it attractive to a buyer is increase in sales and profit every year but very few peaks and valleys.
Think about it: When you're buying a business, do you want a bunch of inconsistencies in the sales and growth? Or do you want to see a steady, and easily predictable progression of profits each and every year?
The other thing that is important, that makes it very attractive to a buyer, is strong management. In other words, you?ve brought people in, maybe even beginner people, you?ve trained them, they?ve come along, and you have a very good management team in there because that?s the thing that carries the business forward. A smart buyer is not going to want to mess around with changing things around. They want to be able to just sort of step in and keep things going without interruption.
If you have a good management team in place already -- who know and understand the business, the employees and how everything works -- then a buyer will know he won't have to do all that much once he steps in.
Arthur B. Hamel has recently decided to share his unique business-buying secrets and tactics free of charge at: http://arthurhamel.com