The time has come for you to part with your business. With your sights firmly set on the horizon, the business you started has run its course and the next venture is now on your mind.
There is more work to be done, however. Implementing an exit strategy takes time, but it’s the most important thing you can do. Your business needs to be a valuable asset that interests buyers, and the work you do now will prepare you for a successful sale.
Having provided many firms with a clear idea of their business’ valuation, Company Valuation Services (CVS) can help you realise the true potential of your company and, in turn, increase its worth within a 12-month timeframe.
First of all, it helps to understand where business owners are going wrong.
We spoke to a host of experts to bring you some essential tips…
To understand the kind of pitfalls owners fall into when trying to boost the value of their business before sale, we spoke to SME consultant Graham Robson from national business network Business Doctors.
“When considering selling their business many owners wrongly believe that the value is embodied in the hard work that they have put into the business and the personal relationship that they have with their customers.
“This can lead them to have unreasonably high expectations when entering the sale process.”
Instead, it is more about what the business owner leaves in their absence. It is in both yours and the buyers’ interests to hand over a profitable enterprise.
Another problem lies in the seller’s expectations. CVS see numerous owners underestimate the value of their business, due to either a lack of insight into their own products and services (and their consequent value), or simply hiring the wrong adviser.
This should be your first port of call. The sales process represents the foundation of your business, and it’s where you will see the clearest results.
Whether you need a complete revamp or just a few tweaks here and there, the sales department is where you start. We’ve laid out five areas in which you can make sales improvements, beginning with your understanding of the business.
There are numerous stages within the sales process that you should be thinking about, and product knowledge is arguably the most important.
You ought to know your products inside out, understanding exactly what your services are comprised of and how they benefit your customers – remember, the benefits are far more important than the features.
How well you understand your products will translate brilliantly to your customer. Your confidence will seep through to customers on the other end of the phone, as well as investors sitting across from you and whoever is interested in your company.
Once this product knowledge has spread throughout your workforce and your employees have been well-trained, you should see significant improvements in sales. Reinforcement is vital, as it is no use implementing these changes without ensuring their longevity.
Once your products have become second nature, you can begin to hone in on your target market. It is little use having an extensive knowledge of what you’re offering without knowing who you are offering it to.
Do your research into who will benefit from your products and services, and start from there. You can sort your audience into market segments, breaking things down by age, gender and occupation.
It’s also important to keep an eye on your competition – who is outselling you in the industry? What is it that your competitors are doing better, and how can you begin to challenge? These are the questions you should be asking before the sales process begins.
How do your services address people’s issues? What do they offer customers, in terms of solutions? This is called needs assessment, and it’s an integral part of the process.
Gain some insight into the kind of issues that face your target market. With this knowledge, you can create or improve products that alleviate these pain points.
With this in mind, you can begin applying the process in real-time. Your sales approach is the outcome of the above.
With the research in tow, you should see far better results in your sales department.
Finally, you should have a follow-up system in place to ensure that your customers are happy and well-positioned to continue using your service. Engage your customers by asking for feedback. Ask how you can improve on the service.
Many companies fall at an early hurdle by trying to cater to multiple markets at once. You need to define your service and products by doing the research to find gaps.
Keep in mind, however, that you don’t have to be super specific and you certainly do not need to be a ‘trailblazer’, as such. It’s more about finding people’s problems, and taking steps to solve them.
To get a little more information, we got in touch with some self-made entrepreneurs for their personal business tips. There is plenty to be taken from their success stories, particularly if you’re working on a tight timeframe.
Here is freelance web designer Katy Carlisle, who grew her business The Wheel Exists from the ground up (eventually becoming a finalist at the Freelancer of the Year Awards in 2016).
She had the following to say about finding your niche market…
“As I’ve been more specific with my service offerings and target customers, I’ve noticed better results and more referrals,” she remarked.
“Now, all of my client work is via word of mouth and I actively turn down work outside my area of focus, as I have found the right balance that suits my skills and values, whilst also meeting the needs of my customers. In a world where reputation matters and everyone has the opportunity to share their views in public, this is crucial.”
Be specific, know your products and act accordingly. While it’s tempting to spread your net further, you will likely find more depth in the more targeted areas of your market.
Following on from finding yourself a niche is defining your business’ USPs. Standing for ‘Unique Selling Point’ – or, Unique Selling Proposition – USPs are important because they are essentially the aspects of your business that set you apart from the rest.
In the early stages, they help you better understand the identity of your business. What area of your business would you consider the strongest? The most competitive? These are the areas you should be championing.
We spoke to Founder and Managing Director of digital marketing agency Bring Digital, David Ingram, for more information on why USPs are so integral to a business’ identity:
“We work with a lot of businesses at Bring Digital, and each one has select characteristics and objectives. While this means that we have to be extremely adaptable, we know where our strengths lie.
“When your business has proven to be particularly good at something, you want to shout about it. That’s why it’s so important to know your USPs, and make them the focal point of your overall marketing strategy.”
These are basic sales strategies, and yet many business owners lose out by selling their companies without proper processes behind them. Before you sell, ensure that your sales process is 100% foolproof and designed to yield maximum profits.
One of the key ways you can save money and boost profit is by making a few small changes to reduce your business’ dependency on certain customers, employees and suppliers.
If, for example, a certain customer is responsible for a large chunk of your sales revenue, you become reliant on them.
Were this customer to take their business elsewhere, your revenue would plummet.
This rings true for suppliers and employees, too. If you rely solely on one supplier and they go out of business, you may have to locate new suppliers for your whole product range. Is your star employee looking elsewhere? Retain key staff, and ensure their knowledge spreads through the team.
Your business’ new era needs to begin completely afresh, with clear processes in place.
Duane Jackson sold his first start-up KashFlow back in 2013, in a multi-million-pound deal. Since then, he has experienced success in various other business ventures and launched Supdate, a platform allowing start-ups to keep better contact with shareholders.
According to Duane, there are some key things you should be doing to increase the value of your company and ensure future success for a new owner.
“The main thing to make the business ready for a sale is to build it so it can operate without you. Buyers don’t want a business that’s dependent on the person they’ve just written a cheque to.
“The key to this is to have good people and well-documented, followed processes – not just for how the business does what it does day-to-day, but how it plans, reports on those plans and how it grows.”
Of course, finding good people can often be easier said than done. Duane continued…
“You need to find and retain good people. Thankfully, retaining them fits in with what you need to do to make the business saleable.
“You need to delegate power to them. Give them the authority and ability to be responsible for planning and delivering what’s required.”
With a strong team behind you, you can sell up safe in the knowledge that your business is in good hands, ready for the next owner.
The reputation and value of your business are linked. The more customers know about your products and services, the better positioned they are to take action.
To get the low-down on how reputation and business value are linked, we spoke to PR Director Jo Swann at branding experts Chocolate PR.
“The value of your brand is intrinsically attached to its reputation. For years we have been working to help the ‘little guys’ take on the ‘big boys’ via PR – and this is one of PR’s greatest gifts,” she told us.
“Building a profile in your industry, amongst peers, influencers, stakeholders, analysts and investors psychologically raises the value of your brand in their eyes. If your voice is heard, your business is recognised.”
All of this is essential if you are to raise your business’ profile and boost its value. To ensure that your reputation is optimised and has a clear corporate identity, Jo recommends that you use social media to its full potential…
“Reputation management via media and social media also enables you to play a part in controlling your profile – you can direct it, you can be responsive to any third party commentary on it, and all of this strengthens your voice and impact in the industry.”
In short, getting your brand profile right is essential to making your business attractive to potential acquirers. Jo Swann summed up with the following:
“Consider adding in the value of customer evangelists, as well as brand ambassadors who take it upon themselves to promote your business for you – any business who has a loyal following and whose customers truly buy into the brand is of interest to investors.
“We’ve seen several of our clients attract investors for their next level of growth, and some through exit strategies – and for all of them how they differentiated in the market, and the level of their brand profile was a key factor in having attracted those opportunities.”
With the above advice in tow, you can set your business up for a successful sale.
Remember that it is vital that your business is in decent shape for the next owner; leaving on good terms will not only instil confidence in the next owner, it will also give you the skills and experience needed for your next venture.