Most small businesses dream of selling their business for a large sum of money. What can you start doing today to increase the chances of this happening?
This week on Small Business Radio I spoke to John Vitti. He is a serial-entrepreneur, and after launching and selling three consumer companies at multi-million dollar levels, he is now the CEO for his latest venture, VersusGame. It is an entertainment prediction gaming app which puts current topics in pop culture, sports, and celebrities into a classic, “this versus that” competition. VersusGame, which was launched in 2019, has seen a significant growth in its player base. Millions of dollars in cash prizes have been awarded to players.
John hopes that people don’t start businesses just to make money, as this might not be in line with their goal of helping customers. He adds that “if you’re successful and create value, then someone will buy it.”
John started his business by solving problems people had. John automated parts of the sales process in his last B2B business, where there were large teams of salespeople. This made it more profitable.
John advises that the best way to prepare for a exit is to “let a partner eat you”. This means you should establish relationships with businesses you have known for many years before selling your business.
Make sure that your financial statements are accurate and correspond to your tax return. John warns that selling is not a task for the weak-hearted. He says that the “typical problems are stress, sleeplessness due to due diligence and changing deal terms. It’s terrible! I wouldn’t wish this on my enemies. It’s a bit like a high-school dance with lots of money. “When things get bumpy, having a solid relationship with your attorney and board will be helpful.”
How to Sell Your Business Successfully
Many small business owners strive to sell their business at a profit. You can increase your chances of getting the sale you want and a good payout by implementing these strategies:
- Create value from the start When you launch your business, concentrate on creating value for customers by addressing existing problems or requirements. A business that is committed to helping its customers will attract more buyers in the long run.
- Automate and Optimize To increase the value of your company, automate and optimize key processes. Making your business more profitable and streamlining your operations can increase its appeal to potential buyers.
- Establish Long-Term Relations: Develop and nurture long-term relations within your industry. Even years before the sale, establishing connections with businesses you might consider selling to can help make the acquisition process easier.
- Financial Accuracy Ensure your financial records and tax returns are in line. When selling a company, it is important to have clear and transparent financials.
- Be Prepared for the Challenges Understand that selling your business can be an extremely complex and difficult process. Prepare yourself for possible stress, sleepless night, and changing terms of the deal. To navigate through these challenges successfully, cultivate strong relationships between your board and lawyer.
- Strengthen Your Board A knowledgeable and supportive board can be a valuable resource during the selling process. Assemble a board that has experience in mergers and purchases to assist you with making informed decisions.
- Timing is Important Be aware of the timing for your exit strategy. When your business is at the peak of its performance, you can sell it for more money.
- Listen to Learn: Educate yourself continuously on the complexities of selling a company. You can learn from successful entrepreneurs that have been through the same process as you.
- Commit to Value : Even though the goal is to sell your company for a profit it’s important to always put your clients and customers first. Profitability and success often attract buyers that recognize the value of what you have built.
