According to the Canadian Federation of Independent Businesses, 76% of small to mid-sized business owners plan to sell their business in the next 10 years. Over three-quarters of those owners hope to retire after selling, making it even more important that their business sells for the best price possible.
Whether you aim to sell in two years or ten, building a business that attracts buyers enhances your success now and ensures you receive maximum profit when you sell. Exit planning is critical to your business’s success; here are the things you need to do to maximize the value of your business and make it irresistible to buyers.
1. Prioritize Growth
Buyers overwhelmingly favour businesses that are growing and profitable. A lack of demonstrated growth can deter potential buyers even if a business is priced competitively. Successful businesses show steady, predictable growth, which signals to buyers that the business can sustain itself long-term.
According to recent data, businesses with an average of 10% annual growth tend to attract more buyer interest. Additionally, the most lucrative businesses often have diverse revenue streams, loyal customer bases, and solid financial forecasting.
Profit Booster: Develop a detailed five-year growth plan that includes specific revenue targets and market expansion opportunities. Consider investing in digital transformation initiatives or new product lines to future-proof your business and enhance its scalability.
2. Get Organized and Transparent
For a buyer, transparency is critical. Buyers want to understand what they are acquiring. A business that runs like a well-oiled machine, with clear and organized documentation, is far more attractive. Ensure that your legal, financial, and operational records are accurate, up-to-date, and easy to access. This includes profit and loss statements, tax filings, employee contracts, supplier agreements, and intellectual property documentation. If your records are disorganized, buyers may perceive this as a sign of instability or high risk, which can lower your business’s value.
Profit Booster: Conduct a thorough audit of your records and processes. Implement cloud-based systems for managing business documents to ensure everything is accessible and transparent. Also, consider seeking an external audit to give potential buyers added confidence in the legitimacy of your business operations.
3. Make Yourself Replaceable
Buyers see a business that is overly dependent on its owner as high-risk. If you are the only person capable of running day-to-day operations, the business will be more challenging to sell. Buyers want to know they can step in or install new management without the business skipping a beat.
Building a strong management team and cross-training employees is the best way to make your business less dependent on you. Focus on documenting processes and delegating authority to team members. This allows the company to continue running smoothly, even if you’re not involved.
Profit Booster: Begin delegating responsibilities to trusted managers or employees within your business. Establish a succession plan and ensure that critical roles are filled by individuals capable of leading without your direct involvement.
4. Diversify Your Customer Base
A diverse customer base reduces risk for buyers. A company reliant on a handful of large clients or a single sector is vulnerable to market fluctuations. By diversifying your customer base and industry sectors, you show buyers that your business is stable, resilient, and less exposed to economic shifts.
In Canada, sectors like quick service restaurants, technology, renewable energy, and healthcare are poised for strong growth, making them appealing areas to expand into. Businesses that have demonstrated adaptability to market changes are more likely to attract buyers.
Profit Booster: Identify potential markets or sectors for expansion and create strategies to diversify your revenue streams. Consider targeting different geographic areas, launching new services, or expanding your digital presence to reach more customers.
5. Build a Strong Brand and Online Presence
In today’s digital age, a strong online presence is not just a bonus, it’s a necessity. A well-established online footprint—complete with a professional website, active social media profiles, and positive customer reviews—sends a clear signal to buyers that your business is modern and has room for growth. On the flip side, a lack of digital presence may lead potential buyers to view your business as outdated or difficult to scale.
Profit Booster: Build your digital presence by optimizing your website for SEO, engaging with your audience on social media, and soliciting online reviews from happy customers. This helps establish credibility and makes your business more desirable to buyers, especially those motivated to expand your brand’s reach.
6. Streamline Operations
Efficient operations are a major selling point. Buyers want to see that your business runs smoothly and is not bogged down by inefficiencies. Whether through automating processes, reducing waste, or cutting costs, improving operational efficiency will make your business easier to sell.
Businesses with lower overhead and strong profit margins typically sell at higher prices. Streamlining operations also boosts profitability in the short term, allowing you to reinvest in other areas of your business.
Profit Booster: Review your operations for inefficiencies and identify areas where automation could streamline processes. From customer service tools to supply chain management software, leveraging technology can cut costs and improve operational efficiency.
Now is the perfect time to build a business that is attractive to buyers. You can significantly improve your chances of selling your business for maximum profit by focusing on growth, organization, scalability, customer diversity, and operational efficiency. If you’re planning on selling in the near future, consider partnering with Acuity Business Group. We specialize in working with business owners to implement growth strategies and exit plans that increase the value of your business and inspire more buyer interest.