By Bindi Shah
You may want to sell the venture you have built for many reasons. You may want to monetize the value you have invested in the business, you may not have an effective succession plan in place, or you may simply want to focus on another business. Here are certain points you should keep in mind if you wish to build a sellable business.
Focus on strategy and scale
For selling a business, the most important factor is that it should be scalable. Your business should offer a product or service that the seller can take to other markets and replicate the model for growth elsewhere. You should also have a clear growth strategy in place including verticals served, product pricing, resource allocation etc.
Get the financials in order
It is very important for your business to have positive cash flows. If there is a working capital crunch, the buyer will have to infuse much more money into the business and that will impact his profits. Also, a crucial aspect among the financials is sales or revenue figures. A strong sales pattern, a bouquet of marquee customers, order size and repeat orders, a sales team independent of the promoter—these are all factors indicating a healthy sales book.
Set up good systems and processes
When you start your venture, having a system or policy in place for every small thing may seem unnecessary. However, as your venture grows, it is good systems that will help your operations run smooth. If an employee wants to leave, there should be a policy for the same. If a contract has to be signed with a new customer, there should be a referral policy for the same. Systems help scale, delegate and smoothen employee transition. Invest in governance systems; good governance could make or break the deal for your company in today's times.
Balance your role in the venture
Your organization cannot be overly dependent on you if you wish to sell it. A lot of companies don't get sold because customers associate everything about the business with its owner. Sale will happen only if the owner is involved. Similarly, it shouldn't be that you are completely dispensable to the business. If so, the buyer may leave the table feeling that you bring no value to the business. Thus, carve out a balanced role for yourself in the venture. Also, hire good managers on board and offer them long-term incentives so they stay before and after the deal.
Finally, don't sell, be bought
Experts say that if you focus on chasing customers and building the business, then the buyers will automatically flock to your nest. So don't sell, get bought!
© Entrepreneur India August 2012