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Take the Business Sellability Test

I have spent a lot of my time recently talking to clients and business owners about the subject of buying and selling companies, and learning more about this subject in the process.

The word to emphasise in the above is talking. It seems to be very hard to make the deals actually happen, though I am not sure why this is.

However, I am convinced that there are many things that can be done to make a business more attractive to buyers and to maximise its value. The great thing about these changes is that they are no different to what you should be doing anyway to improve and develop your business if you are planning to keep it and run it yourself.

This is one of those areas where there is often too much advice available. However, I have recently been listening to podcasts by John Warrillow, author of Built to Sell. The podcasts are part of the E-Myth Worldwide website and newsletters. John’s structured approach to making a business sellable is very much in line with Gerber’s philosophy of how to build a business.

The full eight steps (not seven for a change!) are as follows, although the first five are the important ones for the purpose of this blog post.

1. Identify a single scalable product or service that is:

  • Teachable – you can train people or programme technology to deliver them
  • Valuable – your customers want to buy them
  • Repeatable – you can show an acquirer a future stream of income

2. Create a positive cash flow cycle, i.e. charge customers in advance, or at least on a ‘pay as you go’ basis.

3. Find someone else to do the selling in your business or automate the sales, e.g. using the internet.

4. Stop accepting orders for anything but your scalable product/service. You can never get full value from specialising if you do lots of other things as well.

5. Launch a long-term incentive plan for managers, to tie in key employees and ensure they are properly rewarded.

6. Find a good person to help you sell the company.

7. Tell your management team (at the right time, of course).

8. Convert offers to a binding deal.

Curious about whether you could sell your business (and for how much)? Take the ten-question Sellability Index Quiz at www.BuiltToSell.com

John Warrillow is speaking at a conference in the UK in December.

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