Build a Business That's Sellable!

By Dick Stieglitz

A business owner approached me at a networking breakfast and asked how he could sell his business. Eager to help a new client achieve his objectives, I agreed to met with him in his office the following day. Over night, I researched the web for information about his company. I found a few news stories and an article that he wrote, but didn't find a website for the company.

At the meeting the next morning, the business owner proudly explained that he had developed growth strategies, marketing plans, and branding tactics for mid-sized businesses for about 20 years. His track record was extraordinary and he had multiple success stories of clients who more than tripled sales the year after implementing his recommendations. His annual revenue was near two million dollars and he had five employees: three assistants who helped conduct workshops, an office manager, and a bookkeeper. I listened carefully and asked questions, but in the end I had to tell him that, in the business' current form, he had nothing that any one would buy. He had been so busy helping his clients that he never built a business that was sellable.

I've met dozens of people like this owner. They are financial planners, technology experts, sales consultants, and website developers. Most are highly educated professionals who are good at what they do - and make a great living doing it. But they will have to work forever, or retire on the IRA money they can siphon from current earnings.

So, if your office is your home, you deliver a service that is available from many people, your business processes and financial records are in your head, and you have customers who are also good friends, then selling your business will be difficult because it will have little value in the eyes of a buyer. On the other hand, if you have intellectual property like patents and trademarks, written procedures, reusable report formats, technical documents, training courses, workshop curricula, and a staff who can deliver them, then you have something to sell.

Business owners often get caught in the day-to-day challenge of winning and servicing customers and, when the time comes to exit, they have few options. To be sellable, the business must be capable of being operated without the original owner, and it must be transferable to a new owner. The main features that buyers are looking to purchase in a business include:

• Customers who are loyal to company, not the previous owner
• Written contracts with customers, suppliers, and distributors
• Clearly documented business processes and capabilities
• A team that can deliver your service or product without you
• Licenses for proprietary processes and software
• Leases for property and equipment
• Employment agreements with key personnel

If you start with the intent to develop a business that has these features, then you will have something that can be transferred to your employees or family, or sold to a third-party buyer.

About the Author:

Learn more about building a sellable business in the book "Expensive Mistakes When Selling a Company " - see rel=nofollow http://www.57mistakes.com