What makes a successful entrepreneur? It’s quite literally the million-dollar question in the world of buying, growing and selling businesses…
Forbes1 describes the entrepreneurial spirit as “a mindset. It’s an attitude and approach to thinking that actively seeks out change, rather than waiting to adapt to change. It’s a mindset that embraces critical questioning, innovation, service and continuous improvement.”
Michael Kerr, an international business speaker and author, says “It’s about seeing the big picture …being agile, never resting on your laurels, shaking off the cloak of complacency and seeking out new opportunities.”
Always thinking ahead
That agility and hunger for momentum and change is why many entrepreneurs go down the route of buying and growing a business to sell. When they buy, their goal from the outset is to build a company that will have acquirers knocking down the door to buy it a few years down the line – and for a tidy sum.
Growing a business to sell at a later date is a long game with many considerations, but there are a few key things to be aware of if that’s where you want to channel your entrepreneurial spirit. As always, having a plan is everything.
Get to know your industry
Every sector has its own intricate machinery of key players, buying patterns, processes, important networks, major calendar dates/seasons, emerging trends – to name just a few of the moving parts. If you’re going to buy, grow and sell a business effectively then you need to understand all the ins and outs of the engine that drives it so that you can make smart investments.
Immerse yourself in market data as well as consumer reports and feedback, attend key conferences and networking events, and enrol on training courses to get the depth and breadth of knowledge and understanding required to succeed.
Nurture keystone elements to grow: customers, staff and the bottom line
Even if your ultimate plan is to exit the business, you must fully commit yourself to the quality of its core components as if it was your life’s work and great masterpiece. Those dependencies are the customers, staff and the bottom line.
Establish contracted, recurring revenue streams that will allow sustainable growth. Review assets and costs to see how you can automate or cut back to operate more effectively. When it comes to customers, nurture those both old and new by carefully monitoring the end-to-end customer journey. That goes for your main suppliers too. This will alert you to any issues that could damage the business, so they don’t end up affecting the saleability.
Remember, all your business dealings could bring opportunities to build useful relationships with influential people in your industry who could lead you to a sale in the future.
And don’t forget the obvious – your staff! Skilled, productive, loyal employees are the lifeblood in every business and something future acquirers will view as a major asset. Build a strong management team and incentivise them to nurture their teams in a way that makes the whole workforce a major selling point.
Refine processes and systems
No matter what sector you’re in, clear, well-documented and transparent processes and systems will allow you to show a buyer just what an attractive proposition your business is when you come to sell it.
The future business owner will be attracted to the reassurance that documented process brings. It means they and their staff can hit the ground running when they buy the business. After all, a disruption to customer service could cost them business at a critical point. Robust processes and systems help them mitigate that risk.
It’s good business practice to make sure that all financial and corporate records prove the same attention to detail. Any serious acquirer will do a thorough audit and they’ll be deterred by any nasty surprises – or even just by question marks in your paperwork.
Have a strong exit strategy
If you’ve just bought a business, an exit strategy might not be at the forefront of your mind. However, even if you aren’t thinking about selling for another 10 years or more – that exit strategy should act like a compass in everything you do.
Every decision you make could have a potential impact on the value of your business in the long run, so consider how it will influence your eventual goal of selling.
The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management. This article has been provided courtesy of Entrepreneurs Hub (www.entrepreneurshub.co.uk)