When selling your business one day, present a business that doesn’t simply follow the tide
The expression goes – all ships rise in a rising tide. What does your ship do?
When the day comes that you present your company to a potential acquirer, they will quickly look to see if your company performance simply rises and falls as your overall industry does, or whether you’ve built something more special.
Ask yourself – does my business revenue simply follow the rise and fall of what my industry does? Or is my business unique with a portfolio of products and/or services that allow me to perform well despite what my industry is doing – are we growing more than others when the industry is up and slowing down less than others in your industry when there is a downturn.
A business that doesn’t simply follow the ebb and flow of the industry tide will generally be of higher value or worth in the eyes of a future acquirer. When your industry is experiencing a downturn, if you can be up or at least be down less than the general industry, your company worth will be higher than your peers.
You achieve this by doing any of the following:
- Have diversification of end markets so you’re not too reliant on a single sector.
- Have diversity of product/service price points – when an industry tide is rising, buyers will generally be willing to buy a Better or Best solution. When an industry tide is receding, they might move to the Good solution as the Better and Best are deemed too expensive for the time.
- Have a unique selling proposition versus competition and one that your current and potential customers can clearly understand. Having this will allow you to fall less during an industry downturn and rise more when it’s doing well.
When the day comes that you want to sell your company, command a higher purchase price by presenting a company that has historical performance that does better than the general industry during rising and lowering tides. Building such a business will greatly enable you in achieving your euphoric exit event. The right strategic planning and execution can help you achieve this. Call us today for ideas on how to get started.
