Six Ways to Prepare Your Business for a Sale

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Many business owners intentionally set up their business for future sales. Often, we heard that start-ups are acquired for millions of dollars, just a year or two from their establishment. This is a good proposition if you build the company from scratch and with limited budget. Here are things that you should do if you are preparing your business for future sales:

  1. Be innovative: Big corporate regularly acquire highly innovative start-ups. Set innovation goals for the company and it should be about creating something that is not yet available in the industry. Project your business two or three years in the future. Introduce new innovations and make sure people in the industry know about it.
  2. Have a capable team: If you want to be innovative and highly proficient about certain topic in the industry, you need to have good professionals in your team. Other than experts, you should also work with external attorneys, accountants and consultants to ensure that your business remains appealing for potential acquisitions. Each professional in the team should bring a vital contribution or two to the table.
  3. Watch your expenses: In some cases, your business acquired, because it’s simply profitable. You can achieve this only by watching your expenditures. You need to eliminate unnecessary expenses and clean up income statement. You need to fully examine cash flow and make sure that you save every dollar. You should put yourself on the shoes of potential buyers and make sure that your business appears valuable to them. Do anything you can, so you are able to enhance the value of your business.
  4. Use an efficient information system: Start-ups should fully understand about what’s happening in the market and industry. It means that the information should be accurate and timely. Make sure that your information system will be highly transferrable to potential owners in the future. A complex financial system may be useful for you to get real time information about cash flow, but it may not be fully usable for potential owners in the future. If you use a type of software, make sure that people can use it very easily. You should be aware of industry standards that can handle inventory and project management.
  5. Set up a competent management team: A start-up can be highly appealing only if it’s lead by a highly competent management team. If you are open to future acquisitions by larger companies, you should prepare a good exit plan. This includes ensure the financial safety of the management team. This may include providing them with a bonus, when the acquisition deal is confirmed. This will ensure that everyone in the team will stay motivated and work hard to achieve any goal that you set up.
  6. Manage relationships with external parties: In many cases, acquisitions happen because business owners have good relationships with one another. If you invest time to set up relationships with larger companies, there’s a bigger chance that your company will be acquired at high purchase value.
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