This write-up is a personal memoir of my business startup to sale. Hold my hand and walk with me through my incredible 5-year business journey, right from the birth of my business idea, through the process of starting out, building the brand and to its final climax: selling out!
My entrepreneurial eureka moment came during a brainstorming session that birthed the idea; of starting a new business to launch a cosmetic manufacturing start-up firm.
At that point, the idea of ever selling the business never crossed my mind. I practically breathed and lived my business idea, my brainchild, my start-up firm!
It was my ‘baby’ project, and I derived maximum pleasure and fulfillment from nurturing and expanding it. My every waking moment spent at my firm; I simply had an obsession about growing my business idea into a flourishing company.
I could however not achieve this by being an island, I needed support, someone, who I could build with, so I engaged the services of my then-boyfriend, now husband, to be my business partner.
Nobody was more stunned when after five incredible years, I woke up one day with a ‘divine,’ burn-out inspired nudge to sell the business, my ‘baby’ project!
Do you relate to that same feeling I had that morning? Do you feel like you are quitting your business? Or maybe you are just looking to implement a business idea you have?
I will be sharing some of my hard-won counsel to aid you in your pursuit of entrepreneurial success. Read on and learn!
Dos and Don’ts for Starting up and Selling Your Business
First Phase: Startup
DO: Have Systems, Processes, and Other Important Information Documented
It is important you have all the steps for significant business functions documented right from the start. Regardless of if these processes are, as in my firm’s case, manufacturing instructions, or other actions, recorded information will guarantee that those actions and information can be delegated, revamped, used as a prerequisite, or at a later date, sold.
The importance of information and records documentation cannot be overstated, this information and documents include but are not limited to sales records, supplier’s info, customer list, customer contact, orders, passwords, employee list, etc. This documented information and files are referred to as ‘Goodwill’ by accountants, and they represent a significant part of a business valuation (in an event where you decide to sell your business).
DON’T: Brand your Business with your Name
In an eventuality where you decide to sell your business, potential buyers will not appreciate having your name on the front door, particularly if your business has grown a significant retinue.
Having your business branded with your name is a potential turn off for prospective buyers who might be under the impression you are not in actuality selling a business, but just your ‘job’ and ‘client list,’ both which would attract a lower buyout fee.
Second Phase: Building Your Brand and Business
DO: Employ the Services of Skilled Professional Accountants
When building your business and brand, it is important you have under your employ the services of highly trained personnel in every department of your firm. It is, however, a lot more important you be able to depend on the services of an in-house professional, highly skilled accountant who has experience in small business issues. Having a highly trained accountant to call on is an important factor if you are looking to keep your firm afloat.
In an eventuality where you decide to list your business for sale, having regular accounting reports would be highly consequential. Professionally documented tax returns and profit/loss statements will incontrovertibly substantiate your company’s worth.
DON’T: Bury Profits for Tax Reasons
A lot of business owners (myself included) can be tempted to write off some expenses and as such the company declares little or no profits. In the short term, this might save you, the business owner/entrepreneur, some cash on your taxes; it, however, spells disaster for a future business sale.
Potential buyers would rather deal with a company/business whose past year tax returns show profits, realistic profit numbers at that. You would too if you were a potential buyer, won’t you?
Third Phase: Prepping and Listing Your Business for Sale
DO: Be Sure About Your Decision to Sell; Take Your Time When Deciding
Deciding to sell your company is quite a big deal, it is not a decision to be taken lightly. If you are making the huge decision to sell out your business, be sure you have thought things through and thoroughly, and you are confident you want to sell your company.
Be certain that your decision to sell is not being influenced by a bad day, week or even month. Once the process of your business sale is finished, it is usually impossible to reverse.
To make a final decisive decision on whether to sell your business or not, make a comprehensive list of reasons you feel it’s time to cash out. Are those reasons valid and stable? If they are, then, by all means, go ahead with the sale.
I had a friend who had her business (a salon) listed for sale, she, however, realized she was not ready to cash out when offers for the salon started coming in.