When you’re getting ready to sell a business, you’re probably reflecting on all that you’ve achieved since those early days as a fledgling start-up. Naturally, most business owners tend to showcase these hard-won past achievements as if they were USPs. But whilst they are a cause for celebration and pride – they aren’t necessarily the main thing prospective buyers want to hear about.
“The second driver in saleability is growth potential,” says John Warillow, Author of The Automatic Customer and Built to Sell. Yes, buyers do want to hear about that prestigious award you won in 2012 or the hard-won accreditation you gained the year before that, but the ultimate legacy you’ll leave is a business that has the power to evolve in the future.
A key question smart buyers will be asking is how can your business achieve as much – if not more – success for them in the coming years as it has for you? Answer it well and you’ll raise the value of your business in the eyes of acquirers and increase what they’re willing to pay you for it.
Here are just 3 areas of your business where you should seek to demonstrate growth potential and the capacity for prosperity after you exit…
Scope to expand into the mainstream
Do you hold the patent on a product that’s becoming more widely used because of a shift in consumer behaviour, for example as people become more environmentally conscious and seek more renewables and recyclables? Or perhaps your staff have training in a once-niche area that has now become mainstream.
FinTech AKA Financial Technology (computer programs and other technology used to support or enable banking and financial services) is just one example of a strong growth market. As more and more people move to online payment and banking, a survey by the London Stock Exchange found that UK-based FinTech companies can expect a staggering 88% growth between 2018 and 2021.
There are many more examples of products and services that were once only on the radar of specialist groups and early adopters – in this case so-called ‘tech nerds’ or ‘eco-warriors’ – but that are now becoming part of the everyday fabric of a growing number of homes and businesses across the world.
Research customer needs, values and buying behaviour in your sector. Think about the benefits of the services and goods your business provides in a world 5,10,15 years from now. Can you show acquirers how they will adapt and flourish in a rapidly changing world?
Market crossover potential
In a recent speech at The Telegraph Future of Trade & Export Forum in London, Dr Liam Fox, UK Secretary of State for International Trade, said:
“The global economy is changing at a staggering pace. It is predicted that the share of global GDP of the seven largest emerging economies – including China, India and Turkey – could increase from around 35% to nearly 50% of global GDP by 2050, which would mean that they overtake the G7. Last year Africa had five of the world’s fastest-growing economies.”
How could your products and services cross over into overseas markets? Show acquirers that you have investigated not only the buyer appetite overseas, but the practicalities of export, and it could translate into a more lucrative deal for you as you sell your business.
Closer to home, could you be part of a crossover trend from one age group to another, or one that’s propelled by shifting cultural factors. For example, what’s happening in urban areas usually starts to filter out in a more regional way. Map your business proposition onto different demographics and locations and show acquirers what potential you can identify.
The competitive edge
Staying ahead of your competitors is arguably the number one rule of business success. Like us, you’re an experienced entrepreneur – so you know this as well as we do. But how can you prove to potential buyers where you are in the leader board for your sector?
If you’re getting ready to put your business on the market, gather facts and figures to support answers to questions they might ask, such as:
What are the other products and brands growing most significantly in this industry – and why?
Who are the other players in the market – both established and new?
What is their value proposition?
What competitive advantage do you have over them – and why?
However competitive (or not) your current business proposition is, get real about your strengths and weaknesses so you can address or maintain them. Again, take a long-term view. Evaluate how this gap could close over the coming years; whether your company is currently in the lead or keeping a steady pace a few positions back, just for now, almost ready to rise to the top spot.
Your true business growth potential is a complex blend of factors and the external advice of an expert is vital to helping you identify it and get your best sale. Entrepreneurs Hub is an experienced corporate finance company who can help you evaluate how saleable your business is, then support you as you get exit-ready and negotiate the deal.
Contact us for confidential advice on 0845 067 8678 or email [email protected]