Inoculating your business from potential dangers and uncertainties in the future involves strategic planning and decisive actions. Here are three practical steps you can take to fortify your business:
Strategy #1: Stop Trying to Time the Market
Attempting to sell your business at the peak of an economic cycle may seem logical, but it’s often impractical due to the interconnectedness of market conditions. Instead, focus on selling when your company meets two critical criteria:
- Winning Streak: Sell when your business is thriving, with growing revenue, improving margins, satisfied employees, and happy customers. This will command a premium for your business when compared to average performers in the same industry.
- Preparedness for Due Diligence: Ensure you have all necessary information ready for due diligence well in advance. Delays or unpreparedness during this phase can lead to deal fatigue and jeopardize the acquisition process.
Strategy #2: Pick Your Lane
Resist the temptation to diversify too broadly, especially during economic expansions. Acquirers seek businesses with a clear competitive advantage that would be too costly or time-consuming to create independently and may be deterred by excessive diversification.
Buyers may only be interested in purchasing the core focus of the business anyway, meaning the return on investment for non-core operations will likely be underwhelming. Instead, focus on excelling in a specific niche or area where you have a distinct edge over competitors. Pursue growth that will favour a larger exit.
Strategy #3: Create A Vision Board
Maintain a clear vision for your future beyond the success of your current business. A vision board can help you visualize your goals, aspirations, and desired lifestyle. When you find yourself feeling content but not necessarily fulfilled, it may signal the right time to consider selling your business and pursuing new endeavours.
Oftentimes, business owners are the happiest in the early stages of starting their business. They are challenged and excited by the struggles and successes of their business. Most people are inspired by being in new places with new people and growing as individuals alongside their businesses. As a company matures, this allure can fade and it may be time to begin a new chapter in life.
By implementing these three strategies, you can proactively safeguard your business against economic fluctuations, market uncertainties, and the potential pitfalls of complacency.
Contact us here for more tips on bullet-proofing your business and creating an exit strategy.