(5) Clear out skeletons
Clear out, settle, remove any ongoing issues with litigation, employee disputes, uncertain liabilities or supplier issues. Whatever they are, and however painful they might be to deal with, deal with them. By not doing so, theyre eating into your focus and almost certainly putting a dent into your value.
(6) Upfront due diligence
This is the phase where a buyer gets under the bonnet of your business, to ascertain the operating truth. So, if due diligence goes wrong then, at best you might suffer a price chip, at worst, a collapsed deal and heavy costs.
The smart business owner thinks about these risks in advance and the really smart business owners conduct their own upfront due diligence providing buyers with a ready made document.
(7) Get out of your own business
A common reason for losing value or even a deal itself, is owner dependency. Build a management team and systems that enable the business to perform as well, if not better, with you out of it.
Get your business into the position where you can take a long holiday, without it impacting its ongoing performance.
(8) Eliminate non-core expenses
Its common for smaller businesses to be lifestyle businesses. While you can camouflage this by creating an “adjusted net profit”, it provides another pinch point for negotiation and potential derailment. Clear out non-core expenses, make the business lean, show that it’s managed for profit, not family.
(9) Diversify product mix and customer base
A narrow mix of products or eggs in one customer basket leads to a big risk to a buyer. Diversify both elements so the business can better absorb unexpected events.
(10) Know your customer
Finally, what do your customers really think of your business Do you know” An active CRM policy of market feedback, viral word of mouth and customer engagement means you’re talking to your customer and understanding their needs.
Providing evidence of this market nous and valuable customer community will further nail your value and future potential to a buyer.
Andrew Weaver is CEO of LawyerFair.