Boosting Your Exit Strategy: 5 Key Areas to Improve First

I've built, scaled and sold three businesses over the last two decades. And I've learned that selling your company is as much about the groundwork as it is about the transaction itself.?

Maybe you're eyeing a 7-figure exit. Or you may be looking to pass on your life's work to family or colleagues. Either way, certain aspects of your business demand attention well before you even consider listing it for sale.?

In this article, I'll focus on five critical areas. You must enhance each of these to ensure your business isn't just sale-ready but positioned to fetch maximum value.

1. Financial Health and Transparency

When it comes to selling your business, shining a spotlight on your financial health is key. Ensuring everything is transparent can go a long way to sealing the deal.

Ensuring your books are not only in order but meticulously detailed is crucial. Buyers want to see clear, comprehensible financial records. They're looking for profitability, cash flow, and growth potential. This means having up-to-date, accurate financial statements, tax returns, and audits.?

You want to show strength, stability, and the kind of foresight that tells potential buyers, "This is a bet worth making."?

Think about it: would you trust a car seller who's vague about the vehicle's service history? Neither would a potential buyer with your business.

So, how do you ensure your financial house not only looks in order but is actually built on solid ground?

It all starts with clarity and honesty - about past performance, current position, and future potential.

A potential buyer is looking for more than just profitability. They're assessing risk, scalability, and the robustness of your financial processes.?

However, it’s not just about having your accounts up to date, as crucial as that is. You want to narrate the story they tell. Did you overcome a dip in sales with a strategic pivot? Did you harness a new revenue stream that's now a goldmine? These stories are what transform dry numbers on a spreadsheet into a compelling sales proposition.

And here's where it gets even more interesting.?

Transparency doesn't just build trust; it also highlights the value you've created. Don’t just show where the business stands today. Demonstrate its financial journey over the years, and shine a light on its future potential. By doing so, the buyer will view this less as a purchase and more as a smart investment.

2. Strong, Independent Management Team

Buyers invest in people as much as they do in businesses.?

The purchaser will rely on having the owner and key team members in place after the sale, for a handover period at least, and ideally for the duration. Even if the acquisition strategy is focussed on Intellectual Property or customers (as it was in my last sale), the key members will be essential for the transition.

Having people to do the day-to-day work is only part of the puzzle. You must build a team where everyone can lead, make smart decisions, and keep the business strong, even when the boss isn't there.

On that note, a business which is overly reliant on its owner is a red flag.?

You need to design yourself out of operations; make yourself dispensable, in the best possible way. Install and nurture managers who can operate the business without you. You not only enhance its value, you demonstrate to buyers that the company can sustain its success post-sale.?

Think of it like this: when you're selling your business, you're not just selling a company, you're handing over a team that knows what they're doing. A strong team shows buyers that the business can keep doing well after you leave, protecting their investment.

To build this kind of team, you need to do more than hire the right people. You have to share your big dreams with them, empower them to lead, and give them the chance to own their work. This turns a group of people working together into a strong team that can take your business to new heights, with you or a new owner.

This all makes your business really attractive to buyers. When it comes to talking about how much your business is worth, having a great team will make all the difference.

3. Solid and Diversified Customer Base

With any type of investment, diversification reduces risk.?

A customer base that's too reliant on a few clients or a single market can sound alarm bells for buyers. Work on diversifying your customer portfolio. This shows stability and potential for future growth.?

In simple terms, don’t put all your eggs in one basket.

My last proptech business sold software to letting and estate agents. At the top end, we had a small number of national multi-branch agents with large subscription values. These were offset by a much larger pool of single-branch small-town agents. During the due diligence stage of the sale process, the buyers asked for an income breakdown report. They were checking the level of exposure and potential impact on revenue and profits if a few of these larger customers left.

Some did. It didn't change things one little bit. We were insulated.?

To get to this more secure position, first you need to look at who's buying from you now. Then you should explore how you can reach even more kinds of customers. Maybe you can sell your products in new places. Perhaps you can make new things that different people will want to buy.

If possible, secure long-term contracts or adopt recurring revenue models. These can significantly increase your business's attractiveness and valuation.

When it's time to sell your business, this mix is a big plus. Buyers will see that your business can keep growing without depending too much on just a few customers.

4. Operational Efficiency and Scalability

Streamlined operations are a sign of a well-oiled machine. Buyers favour businesses that can scale.

At all stages of your business development journey, watch for inefficiencies and bottlenecks. These are an obstacle to faster and larger rates of sales and production. This is particularly true in the early-to-mid stages where operations tend to be much less efficient.

Then document these processes. Streamline them, enhance their operation and remove errors. Addressing these inefficiencies will immediately improve your bottom line. But it also demonstrates to buyers the potential for scaled growth in future. This is what they are investing in when they purchase a business.?

Invest in technology to automate mundane tasks and reduce errors even further. By doing so, you will usher in new levels of efficiency and perfection.

Technology is the gateway to scalability.

That's just a fancy way of saying that your business can grow bigger faster. The aim is to do so without running into any new operational or logistical problems.?

Having an efficient and scalable business makes it really attractive to a prospective buyer. You’re telling them "Not only does this business make good money now, but there’s also loads of scope for it to make even more money going forward."

When someone is looking to buy a business, they love to see that it's set up to handle lots more customers without any hiccups.?

When it's time to sell your business, these qualities go a long way in demonstrating its true worth and potential, and building your valuation. They highlight that the enterprise isn’t just doing well now, but it’s also set up for success in the future.?

5. Clear Growth Strategy

A roadmap for the future instils confidence.

Buyers aren't just purchasing your current success; they're investing in the future growth of the business.?

A clear, actionable growth strategy is a must. It will outline market opportunities, potential expansions, and new revenue streams. It can significantly elevate your company's appeal and sale price. It doesn’t just show you where you’re going, but illuminates the steps you need to take to get there.

I’m a big fan of car analogies, and there’s no better example than this!

Starting out, you have a car (your business), a map (your plan), and a destination (your goal). Your growth strategy is like a great GPS that doesn’t just know the destination but also the fastest, safest, and most scenic routes to get there. It’s your guide to make sure your business journey doesn’t end up just driving around the block. Or even worse, getting hopelessly lost and running out of fuel on the back roads.

When you’re thinking of selling your business, the strategy is vital. It will help you get it into a saleable state. Each of the steps in this article moves you closer to the position where you can sign that lucrative exit deal. And each also boosts the business’ current worth and future potential by creating value and efficiency. These are all critical to enable scaling.?

A solid growth strategy also proves to potential buyers that your business has the potential to conquer new markets and generate increased profits. Buyers want to see that your business won’t just keep going but will grow bigger and better post-sale.

The new owners are buying the future revenue and opportunities.

Conclusion

Selling your business is a monumental step; it’s what most entrepreneurs dream of when they start out. But it requires careful preparation and strategic enhancements long before you decide to sell.?

Focusing on these five areas can dramatically improve not just the saleability of your business but also its eventual sale price. Remember, the sale isn't the goal in itself. The ultimate goal is to maximise the sale value. Only this will deliver the lucrative reward for your years of hard work and dedication.

And as always, consider pairing your efforts with the guidance of a seasoned mentor. This will illuminate the path to a successful exit, making the journey less daunting and more profitable. My journey from startup to a 7-figure exit was paved with lessons learned in these very areas.?

You can read the full story of my own journey in my free ebook. Are you pondering the future sale of your business? Would you like assistance with the preparation? Do you need guidance through the process?

Feel free to connect with me.