There was a point in time when you wanted to become an entrepreneur and be the master of your life. But now this dream has turned into a nightmare because, as you moved on and started your company, you found out that you need to work 60 to 80 hours a week to sustain your passion business.
Now, you think that it might be time to sell and try something else. For every business owner or investor, there should be an exit strategy. This allows you to sell your business profitably when you no longer enjoy being trapped in it or when it’s just the right time, and the value is high.
In case you are being forced to sell your company because of an urgent personal situation, you also need to ensure that you maximize the price. You don’t want to trade your creative child for a low amount that is not worth your time and effort. Even if it is an emergency, you want to sell at the maximum price.
A systematic approach to maximizing business value
To achieve that, even before you decide to sell, you need to take a systematic approach. Increasing the value of your business will not happen overnight. Business planning for growth is key to ensuring your exit strategy is an entrepreneurial success rather than a disaster that leaves you with pain and debt.
So, now is the best time to make sure your accountants and legal advisors have the right knowledge and experience to give you advice. Our team has business transaction professionals that you can count on. Our experience with business valuations and mergers & acquisitions puts us in the position to be qualified to support you at every stage of the selling process.
To set the right price and actually sell, you first need to know the value of your business. If you want to get the highest price possible from a negotiation with an investor, you need to stick to the facts and figures about your business; you don’t want to present your subjective view of how awesome your business is.
That is why you need to make sure your accountants know what they’re doing and that you have a solid growth plan in place. The valuation of a business is greatly influenced by revenue and profits, and how they consistently increase over a period of time. These numbers affect financial projections, which are used to calculate the value.
However, this doesn’t mean that the best time to implement your exit strategy is when your revenue is at its peak. Oftentimes, a steady flow of income means that a company is built on a steady ground and has good potential for growth, and that the market is not saturated.
On the flip side, it makes sense to say that you do not want to sell if revenue has been declining. This will trigger uncertainty for the potential buyer plus your business valuation will have to be lower. It is better to follow your business plan and wait two or three years until your numbers grow. Establish a timeframe that will enable you to expand until you reach the moment when you will maximize your return on investment.
Maximizing the value of your business can be a daunting challenge; however, business owners sometimes avoid seeking help from professional advisors. But consider, how much you could potentially lose if you make the wrong decisions and sell your business much lower than it is actually worth. Working with an outside advisor will maximize your return on investment, make your exit strategy simpler to implement and give you peace of mind.