This was the culmination of 50 years of growing their business. Most of us in business think we can sell our business for large sums also. However,

receiving a large price for your business does not come automatically. It takes planning, time and good timing.

There are three good ways for most owners to exit their business.

● A strategic sale.

● Generational Succession

● Employee/Management buyout or succession.

It is good to be planning your exit strategy many years before you wish to sell or retire. This will give you time to maximise your sale price and to have the right people if you are considering a succession option.

Get an Appraisal

The first step of your plan is to get an appraisal of what your business is worth from your accountant. The value will most likely be less than you think, because as owners we tend to look at our businesses through rose coloured glasses.

This appraisal will anchor your expectations in reality. The appraisal will give you a starting point to make proactive changes to the business to increase its value. Incidentally most of the things you do to increase the value of your business will also increase the profits of the business, so you get more out of the business.

Adding Value to Your Business

There are a number of steps you can take to increase the value of your business. The first is to make your business different to your competitors by operating a different business model. For example, the Chemist Warehouse business model was to drive their costs down so they could offer a 25% discount on everything and still make good profits.

Other business models are set up to have recurring revenue, so they are not always dependent on chasing sales. Software has gone that way. Even where I buy my coffee beans does it on a subscription basis, delivering it to my door fresh every fortnight. Such a model ensures increased sales and increases the value of the business.

Another strategy to increase the value of your business is to ensure that your business is not dependent on a few large customers. You should be working on your customer base so that no one customer accounts for more than 10% of the sales of your business. High stock levels and high debtor levels reduce what your business will be worth as a buyer will have to tie up cash in this working capital.

Getting your business into good shape to sell and receive something closer to what you would like to get for it takes time. As you progress along this pathway you will make more profits and consistent profits as well as generating greater cash flow.

Start making the changes to your business now so that when an opportunity or a need to exit comes you are ready.