Want to sell your business? Grow the business.

April 26, 2010

My editor husband would say, “You don’t grow a business.  You develop a business.”

One of the goals a business owner might explore is that of selling the business for more than it was purchased for.  Buying right, at a discount, or increasing the net to owner can achieve this.

Since selling a small business is usually based on cash flow to owner, to sell it for more means you need to develop more sales or reduce cost or both, thus increasing cash flow.

Based on each small business owner’s personal needs both psychic and monetary, the drive to increase the value of the business will vary or vary from time to time.  Perhaps, rather than investing excess cash in company enhancements to improve the bottom line, the owner needs the cash at home to resolve a personal need, e.g. repair to the roof of their home.

Some owners are not concerned about the future value of the business because they want to die owning and operating it, have no heirs, and would rather have the psychic returns much more than the financial returns.  Unless there is enough personal wealth, this owner may find their plan to die on the job thwarted by a long term illness.  Having not paid attention to the financial aspects of the company may leave the owner without the financial means necessary to live comfortably while unable to work.

Regardless of your real interests in having your own business, it is wise to consider the future value, just in case you HAVE to sell it in the future, making the most of the transaction.


One Response to “Want to sell your business? Grow the business.”

  1. You make excellent points. One of the most expensive and frustrating mistakes that business owners make is they don’t have an exit plan – they don’t run their companies with the end in mind. For most of the 22 years that I owned my company, I operated without an exit strategy. I just had a sweet dream that someday I’d sell the company and live happily ever after like I saw other business owners do. If you have your own company, there are several things you can do to make it sellable and valuable – and they will increase current profits and cash flow too! The book “Expensive Mistakes When Selling a Company” – see http://www.57mistakes.com – is a great resource in that regard.

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