When considering the purchase of a business, a potential buyer will examine the historical earnings, as well as the future growth prospects for the business. As a business owner selling a business, you are more likely to receive a better price for your business if you can communicate the growth potential of your business in a way that entices potential buyers.
Therefore, in order to increase the likelihood that you receive a premium price on the sale of your business it is wise to develop a growth plan. This plan should outline products, services, or operational changes that could be undertaken by a new buyer to grow the earnings of the business. It is important that these growth opportunities be realistic and clearly laid out. A well-developed growth plan can help to better portray your business and its future prospects, and translate into added value.
Some areas to consider when developing your growth plan are:
- Are there additional markets that a new owner should pursue?
- What additional products/services could be delivered to existing customers?
- Are there products or services that can be offered to generate recurring revenue?
- Where are the best profit margins realized and can they be expanded?
- Can new customer segments be reached?
- Will demand for your product or service increase as population grows?
- How will enhanced marketing campaigns and sales efforts affect growth?
- Can growth be achieved by expanding geographically, increasing manufacturing capacity, or adding multiple locations?
- Would additional hires impact growth? Or, would streamlining the workforce be more beneficial?
- Are there untapped online strategies that could drive growth?
- Are there any cost cutting measures available that you have identified but have not yet implemented?
- Would the company benefit from further training and education?
- Are there industry trends or changes that can be capitalized on to give your company a competitive advantage?
Completing a detailed analysis of the growth potential of your business is a key step in preparing your business for sale. At Beal Brokers & Advisors, we are experienced in analyzing businesses, and can assist you in preparing a growth strategy in preparation of a sale of your business.
Thinking about selling your business? Download our free e-book on exit planning here.