Your business is a success: it’s profitable, has loyal customers, and holds a strong position in the market. By all accounts, it’s an attractive company. But is it a saleable one?
There’s a difference between a business that’s built to run and one that’s built to sell. A business built to run often depends on the owner’s knowledge, relationships, and daily involvement. A business built to sell, however, has value that is independent of any single person. It is a transferable, turnkey asset.
Sure, buyers are looking at your past profits, but they’re also investing in your company’s future. Shifting your perspective to see your business through a buyer’s eyes will help you maximize its value. Here are two strategies to make your business’s value independent of you:
Strategy 1: Systematize Your Secret Sauce
In many businesses, the secret sauce, or the unique processes, customer knowledge, and operational know-how, resides entirely in the owner’s head. While this may work for day-to-day operations, it represents a risk to potential buyers. If you’re the secret sauce, the value of the business walks out the door with you.
The Solution: Document and Institutionalize Your Knowledge
A business is ready for sale when its key functions are documented and repeatable. The goal is to create a turnkey operation that enables a new owner to step in and replicate your success because the systems are clear and effective. Consider the following:
Create Standard Operating Procedures (SOPs): Document the critical workflows for everything from sales and marketing to production and customer service.
Institutionalize Customer Relationships: Use a Customer Relationship Management (CRM) system to ensure that all client history, contacts, and communication belong to the company, not to you personally.
This process of building this structural capital proves that your business’s success is embedded in its systems, not just your personal talent.
Strategy 2: Shift From an Owner-Reliant to a Team-Led Culture
Businesses are ultimately acquired because of the team of people who are there. If you’re the primary salesperson, the lead innovator, and the ultimate decision-maker, a buyer will question whether the business can survive your departure.
An Idea: The Three-Week Vacation Test
Can your business run smoothly without you? Take a three-week vacation and completely unplug (no calls, no emails) while the business continues to operate profitably and effectively. Passing this test demonstrates that you have successfully:
Built a Capable Management Team: You have leaders who are empowered to make decisions and manage operations.
Delegated Key Responsibilities: Your team, not just you, owns customer relationships and workflows.
Created a Resilient Culture: The business’s success is driven by the collective strength of the team.
Transforming your company from one that is simply “built to run” to one that is truly “built to sell” is an important strategic focus. It not only prepares you for a more profitable and seamless transaction, but it also creates a stronger, more resilient business.
If this topic resonates with you, please join us for our virtual 5-Day Business Transition with Confidence workshop. Click here to register.
Susan M. Renaud, CFP®, CEPA
Senior Financial Advisor &
Business Transition Planning Specialist
Office Phone: 603.640.2691
ONWARD