Strategic Planning: Create a Sellable Business
Building value is essential to having a successful company as well as a successful exit. Jeff Clavier, founder and managing partner of SoftTech VC, shares his outlook that good things happen to good companies. As such, entrepreneurs should worry about only one thing: building great products that users or clients care about. Then, eventually, a good (to great) outcome will materialize.
With that in mind, whether you do or don’t eventually want to sell your business, applying the key principles of what makes a company valuable makes great business sense.
Many businesses are never bought or sold because founders fail to focus on what creates true market value. Often owners get sucked into working in the business instead of on the business, which results in the business becoming too reliant on the owner. The owner becomes the subject matter expert that everyone, including customers, relies on.
To prevent growing a non-sellable business, try following a few of these value-creating activities:
Creating a repeatable, consistent product or service offering that doesn’t rely on you
Generating recurring revenue, positive cash flow, and strong, improving profit margins
Systemizing your sales process and deal flow to ensure reliable sales funnel
Developing coveted intellectual property, such as brand equity, digital and physical assets, customer database, and patents or copyrights
Acquiring a diverse customer base to reduce reliance on big customers
Building and retaining a top-talent team because turnover is difficult and costly
Grooming the leader who will sustain your business if you disappeared suddenly
See how you’re doing on creating value by taking the Sellability Index quiz developed by John Warrillow. Also, if you want to dig deeper into any of the topics in the preceding list, check out John’s book Built to Sell: Turn Your Business into One You Can Sell (Flip Jet Media, Inc.), which is full of great info that can help you do just that.