Tips to ensure your invoices are paid on time. Getting invoices paid on time is always crucial for your business, but never more so than now! Having regular incoming payments
If you are planning to sell your business, where should you start?
We all know the story of the person who started their business in their bedroom and then sold it for billions to a multi-national. Think of successful companies from our region, particularly Cambridge. Many of these businesses will have started as either a successful passion project, or they could have been started by an ambitious owner and small team who set their company up with the aim of creating something which would be highly saleable.
Other reasons for a business sale could be as simple as the owner’s retirement approaching, a change of lifestyle, or circumstances which makes the business unviable for the current owner. All businesses will have a life cycle so unless you, as the business owner, literally just want to shut up shop, you should keep an eye on preparing your business for sale, ideally from start-up onwards.
Here’s what we believe are the steps you should consider:
Prove your business idea!
How do you make your business stand out? If you can demonstrate that the market is ready for your idea, by showing you have undertaken solid market research or having positive early sales, you will have a fighting chance. Similarly, this applies to established businesses.
To make your business stand out, you need to know your audience and your marketplace inside out. Start by asking yourself these basic questions:
- Why will your audience buy your product or service?
- Why are you different from your competitors and how can you improve your business by knowing their weaknesses?
For new businesses, early-adopting customers are crucial for you, so nurture them, thank them and make them feel good! For established businesses, make sure you have all your referrals and testimonials in place.
If you have critics, don’t ignore them – take on board their comments and raise your game!
Have a clear funding strategy
Invariably a start-up venture costs more than you think it will and will take you longer to establish than you would want. You can shorten the timeline by developing a clear funding strategy to guide you through each development stage. This strategy will focus on where you think your most likely sources of funding will help your evolving business. Think who your early investors might be. If you want to go to investors, who will they be, and what do they need from you? Will you bootstrap your idea yourself, so will you fund it totally by yourself and expand purely by your sales? Can you apply for grants to help you on your way?
To be honest, different business types will require different types of funding. A service-based business could do just fine by the owner bootstrapping it, whereas a high-tech enterprise will need a solid funding strategy to ensure it hits the market fast enough. Other business may benefit from grants and our local LEPs and Growth Hubs are ideal sources to consider.
Outsource, outsource, outsource!
Outsource everything that does not create value! This approach can be hard for business owners. We all want to hang on to the control of our small business, but it is vital to understand which activities genuinely create value and which are better to outsource.
Identify, and make sure you hang on to, those activities which create value. For example, you may want to control your development strategy or your sales pipeline, but you can see that you spend unnecessary time doing your invoicing or chasing up payments. HR and payroll tasks are always on this list as well, as is ensuring your business remains compliant within its legal and sector regulations. These are things which really should be outsourced to trustworthy suppliers immediately!
Make sure you pick an outsourcing business support team who are trustworthy and who report back to you in a way which works for you. This will ensure you keep control of the way your business is managed.
Plan your team
All start-ups and growing businesses depend on having a reliable team who will help you build a strong foundation so you can launch and run a successful company.
In this time of entrepreneurship and fast-changing business types, it’s unlikely that a business owner will succeed in a new venture without an excellent team around them. Beyond the need for a comprehensive portfolio of skills and discipline, there’s also the investor element you need to consider. Investors or potential buyers will invest in the team as much as the idea. They need to feel comfortable your strong team will be able to overcome challenges and know how to keep making money for the business.
Build your business backwards
There is another way to ensure your business is saleable. You can start by identifying early on who might be interested in buying a business like yours – then build your business with their needs in mind.
Some of the questions you should ask yourself if this strategy is something you want to consider are:
- What are the gaps in their portfolio and what sort of business would fit well within it?
- What would they look for in an acquisition?
- What might be a deal-breaker for them?
- How big would you need to be before they’d be interested in you?
- What types of deals have they done before?
If this is a plan you feel would work for you, make sure you get on your potential acquirers’ radar in some capacity as soon as possible so they can track your progress from the start. Business owners who are successful at this strategy usually are the ones who planned it many years ahead.
Whatever your reason for sale or if you are building a business with the aim of selling it, planning is absolutely key. You will have responsibilities with HMRC when the sale is complete and you may have responsibilities to your team. Our team at AccountAbility-Plus are experienced at building, running and selling businesses. In fact, our managing director Kate has built and sold several businesses herself, so who better to ask if this is something you are considering.