How to Grow Your Business Before Selling: Building Value for a Future Exit

If selling your business is somewhere on the horizon, the decisions you make over the next few years could have a significant impact on the value you eventually achieve.

But simply making the business bigger is not necessarily the answer.

We regularly speak to owners who have grown turnover considerably, added people and won larger customers, yet have unintentionally introduced new risks at the same time.

That is because not all business growth creates value.

The growth that tends to interest potential buyers is profitable, sustainable and repeatable. It comes from a business with a capable management team, predictable revenues, good margins and systems that can support further expansion without everything depending on the owner.

If you are thinking about selling in the next few years, the real objective is therefore not simply to grow your business. It is to grow it in a way that makes it stronger, more transferable and easier for a future buyer to take forward.

That means playing the long game.

If you are still weighing up whether the time is right to exit or whether there is more value to build first, read 5 Signs It’s Time to Sell Your Business.

What Makes Business Growth Valuable?

Business growth can increase value when it demonstrates that the company is capable of producing stronger profits and continuing to perform in the future.

A buyer will certainly be interested in what your business has achieved historically.

But ultimately, they are buying what happens next.

They will want to understand:

• How sustainable are your profits?
• Where will future growth come from?
• How predictable is your revenue?
• Can the business grow without costs increasing at the same rate?
• Is there a management team capable of running it?
• How dependent is the company on you?
• What risks could affect future performance?
• What opportunities would still be available to a new owner?

A business with £10 million turnover is not automatically worth more than one turning over £7 million.

If the £7 million business has stronger margins, recurring revenue, low customer concentration, an experienced management team and a strong pipeline, it may represent the more attractive acquisition.

So before pursuing growth for growth’s sake, ask a more useful question:

Will this make my business stronger, more valuable and more attractive to a future buyer?

“The businesses that attract the strongest buyer interest are rarely just the ones that have grown the fastest. Buyers want to understand the quality of that growth, how sustainable it is and whether the business can continue progressing when the current owner steps away.”
Malcolm Murray, Director & Founder, Entrepreneurs Hub

This reflects the way buyers assess businesses in practice. Strong management, recurring revenue, sustainable earnings, customer diversification and clear growth opportunities can all influence both buyer confidence and valuation.

For a broader look at the factors that influence valuation, read Maximising Your Business Value: What You Need to Know Before Selling.

1. Focus on Sustainable Profit, Not Just Turnover

Revenue growth looks good on paper. Buyers, however, will look much further beneath the headline number.

We often see owners focus heavily on turnover because it is the most visible measure of growth. But during a sale process, a buyer will be far more interested in how that revenue has been generated and how much profit it produces.

Look carefully at:

• EBITDA and adjusted EBITDA
• Gross and operating margins
• Cash generation
• Pricing
• Supplier costs
• Productivity
• Working capital
• Recurring and contracted revenue
• One-off costs
• The investment needed to sustain future growth

If turnover is increasing but margins are declining, costs are accelerating or the business requires substantial additional capital to maintain that trajectory, the growth may be less attractive than it first appears.

We regularly see businesses where turnover has grown strongly, but margins have become harder to maintain. From a buyer’s perspective, that can raise more questions than it answers.

Good financial information is equally important.

A buyer needs to understand how the company makes money, which parts of the business are most profitable and whether forecasts are supported by evidence rather than optimism.

If you do not currently know what your business could be worth, use our Business Valuation Calculator to obtain an initial indicative valuation range.

You can also read How Much Is My Business Worth? A Simple Valuation Guide for Business Owners to understand how buyers assess sustainable earnings, valuation multiples, growth potential and risk.

2. Make Future Revenue More Predictable

One of the strongest ways to improve the quality of business growth is to increase the visibility of future revenue.

Depending on your business model, that could mean:

• Recurring revenue
• Service or maintenance agreements
• Long-term contracts
• Repeat purchasing
• High customer retention
• Subscription income
• Framework agreements
• A strong forward order book
• A visible and well-managed sales pipeline

This does not mean every company needs to move to a subscription model.

A manufacturer with long-standing repeat customers and a healthy forward order book, for example, may demonstrate excellent revenue visibility without traditional recurring contracts.

What matters is being able to show a buyer that future performance is supported by something more substantial than an ambitious spreadsheet.

In practice, buyers are usually much more comfortable with a business where there is some predictability over future revenues than one that effectively starts from zero at the beginning of every financial year.

The stronger that visibility, the easier it becomes for a buyer to form a view on future earnings and risk.

3. Choose the Right Routes to Business Growth

There are several ways to grow a business, and the right combination will depend on your market, capabilities and appetite for investment.

Growth could come from:

• Selling more to existing customers
• Winning new customers
• Entering new sectors
• Expanding geographically
• Launching complementary products or services
• Developing new routes to market
• Forming strategic partnerships
• Making acquisitions

The important point is not to pursue every opportunity simply because it could increase turnover.

Each growth route should be assessed against three questions:

1. Will it improve profitability?
2. Can it be scaled?
3. Will it make the business stronger or introduce additional risk?

For example, entering a new market may create significant growth potential but could also require substantial investment, new management capability or a long period before becoming profitable.

Similarly, launching a new product might broaden your customer proposition, but it needs to fit logically with the business and have a credible commercial case behind it.

The best business growth strategy is usually one that builds on what you already do well while creating opportunities that a future owner could continue developing.

4. Grow Your Customer Base Without Increasing Concentration Risk

Winning a major new account can transform the performance of a business.

It can also create a new risk.

If one customer suddenly represents 30% or 40% of turnover, a buyer will naturally ask what happens if that customer leaves after the acquisition.

Growing your business should therefore include building a balanced and resilient customer portfolio.

Look at opportunities to:

• Win customers in complementary sectors
• Increase retention
• Cross-sell or upsell existing customers
• Develop additional routes to market
• Strengthen the sales pipeline
• Reduce dependence on individual large accounts

Growth from existing customers can be particularly attractive because the cost of generating additional revenue may be lower than continually acquiring new customers.

But customer diversification still matters.

A buyer needs confidence that the future of the business does not depend too heavily on one account, one contract or one relationship.

The objective is not simply to have more customers.

It is to create a customer base that supports sustainable growth without introducing disproportionate concentration risk.

5. Build a Business That Can Grow Without You

For many owners, this is one of the hardest changes to make.

You may have spent years being the person everyone turns to.

Important customers call you. Senior employees ask you to make the final decision. You approve prices, solve problems, recruit people and hold much of the important knowledge about how the company operates.

That may have helped build the business.

But it can also make it harder to sell.

Ask yourself:

What would happen if I disappeared from the business for six months?

• Would the management team continue making decisions?
• Would important customers still feel looked after?
• Would sales continue?
• Would suppliers know who to speak to?
• Would key information still be accessible?
• Or would everything eventually find its way back to you?

One of the most common issues we see is a successful business where too much of that success still depends on the owner personally.

From a buyer’s perspective, the question is simple: what happens when that owner leaves?

Start gradually transferring responsibility.

Give your senior team genuine authority. Allow other people to develop relationships with important customers and suppliers. Document critical knowledge and processes. Put management information in place that allows decisions to be made without continually referring upwards.

Reducing owner dependency does not mean becoming disengaged from your business.

It means building a stronger business that can continue performing when you are no longer involved in every decision.

For more on this, read Preparing a Business for Sale When It Is Dependent on You.

6. Make Sure Your Business Can Scale

Growing a business and scaling a business are not quite the same thing.

If doubling turnover requires doubling headcount, premises and overheads, growth can quickly become expensive.

A scalable business can increase activity without its costs increasing at exactly the same rate.

Depending on your company, this might involve:

• Improving systems and workflows
• Removing operational bottlenecks
• Increasing capacity
• Standardising processes
• Strengthening supplier arrangements
• Investing in technology
• Automating appropriate repetitive tasks
• Improving management information

The aim is not to automate everything or remove people from the equation. It is to make sure the business has the infrastructure to support further growth.

7. Give Buyers a Reason to Choose Your Business

Growth is easier to defend when the company has something distinctive.

Ask yourself:

Why would someone want to acquire my business rather than another company in the same sector?

“Excellent customer service” is unlikely to be enough on its own.

Perhaps your company has:

• Specialist expertise
• Proprietary technology
• Intellectual property
• A respected brand
• Exclusive contracts
• Difficult-to-obtain accreditations
• A particularly attractive geographic footprint
• Access to specialist markets
• Unique processes
• An exceptionally strong customer base
• Knowledge or capability that would take a competitor years to develop

These things can create strategic value.

They may allow an acquirer to enter a market more quickly, acquire skills it does not currently have, expand its geographic presence or add a capability that would be difficult to build organically.

That can change the conversation from:

“What is this company worth based on its earnings?”

to:

“What could owning this company enable us to achieve?”

Shuretech: when growth potential becomes part of the buyer story

When we advised Shuretech on its sale to Gunnebo Entrance Control, the business had developed a strong position providing integrated security solutions, including significant expertise within the growing data centre market.

Our role was not simply to present historic financial performance.

It was also to position Shuretech’s specialist capabilities, market exposure and future potential in a way that would resonate with strategic buyers.

The process generated international, financial and trade interest, with Gunnebo ultimately identified as a strong strategic fit.

“We had ambitious expectations and a clear target we both wanted to walk away with. The team not only met but exceeded our objectives.”
Shuretech shareholders Lewis Hakesley and Carl Graham

You can read the full Shuretech success story and watch Lewis and Carl discuss their experience.

The deal is a good example of why future growth matters. A buyer is not simply acquiring what the company has already achieved. They are assessing what its capabilities could enable them to achieve next.

8. Build the Management Team You Will Eventually Need

Growth often exposes weaknesses that were easy to overlook when a business was smaller.

The structure that worked with 20 employees may not be right when there are 50, 100 or more.

You may need stronger management capability across areas such as:

• Finance
• Sales
• Operations
• Marketing
• HR
• Technology
• Customer relationships

Buyers do not expect every SME to have a large corporate management structure.

What they do want to see is that responsibility is shared, key people understand their roles and the business can continue functioning when the owner steps back.

Think beyond individual appointments too.

A valuable business should not simply replace dependency on the owner with dependency on one managing director or sales director. Build depth.

Clear responsibilities, succession planning and a capable second tier of management can all help demonstrate that the organisation itself has value.

For more on this area, read Recruiting for Growth: Building a Stronger Business Team.

If you are also starting to think about who eventually takes responsibility when you leave, our guide to Succession Planning explains why management depth and continuity matter to potential buyers.

9. Build a Repeatable Sales and Marketing Engine

A common SME growth challenge is inconsistent sales.

You have a strong quarter. Marketing slows because everyone is busy delivering the work. Six months later the pipeline weakens and activity starts again.

That can create unpredictable growth.

Instead, build a repeatable process that generates and converts opportunities consistently.

That might combine:

• Existing customer development
• Referrals
• Digital marketing
• SEO
• Email campaigns
• Paid advertising
• Partnerships
• Events and industry networks
• Outbound sales activity

You do not necessarily need every channel. You need a combination that works for your particular business and can continue without the owner personally generating every opportunity.

Track where leads originate, conversion rates, pipeline value and customer acquisition costs.

The more clearly you can demonstrate how the company wins new business, the easier it becomes for a potential buyer to believe that growth can continue.

10. Protect the Business as It Grows

Growth can magnify weaknesses as well as strengths.

Contracts that were perfectly adequate when the company was much smaller may no longer be suitable. Important supplier relationships may still operate on a handshake. Intellectual property may never have been formally documented. Cybersecurity or compliance processes may not have kept pace.

These issues can remain almost invisible while you are running the business.

During due diligence, they become much more visible.

Review areas including:

• Customer and supplier contracts
• Employment agreements
• Intellectual property
• Property and leases
• Regulatory compliance
• Data protection and Cybersecurity
• Key supplier arrangements

Also understand whether important agreements contain change-of-control, assignment or termination provisions that could become relevant during a transaction.

Our Due Diligence Checklist: 10 Key Areas to Include provides a practical overview of what buyers are likely to investigate.

You may also find How to Get Your Contracts in Order Before You Sell a Business useful if important agreements have not been reviewed recently.

11. Measure What Is Actually Driving Growth

A strong growth story needs evidence.

Saying “our market is enormous” or “we could easily double turnover” will carry considerably less weight with a buyer than being able to demonstrate what has actually driven performance.

Depending on your business, useful growth indicators could include:

• Revenue growth
• EBITDA growth
• Gross margins
• Recurring revenue
• Customer retention or churn
• Order book
• Sales pipeline
• Customer acquisition cost
• Revenue per employee
• Capacity utilisation
• Contract renewal rates
• Average customer value

There is no universal list of KPIs that every company needs to track.

What matters is identifying the measures that genuinely explain your own performance and monitoring them consistently.

We often find that good businesses already have much of this information somewhere within the company, but it is not always being brought together or used to tell a clear story.

A buyer should be able to see what has driven growth, whether it is sustainable and what is likely to happen next.

12. Have a Credible Plan for the Next Stage of Growth

One of the strongest conversations you can have with a potential buyer is not simply about what the business has achieved.

It is about where the next owner could take it.

Future opportunities might include:

• Entering a new geographic market
• Launching complementary products or services
• Increasing sales to existing customers
• Developing another sales channel
• Adding production capacity
• Forming strategic partnerships
• Making bolt-on acquisitions
• Using technology to improve efficiency

But resist the temptation to pursue every possible opportunity yourself before the sale.

Where does AI fit into business growth?

AI can help businesses automate repetitive work, improve productivity, analyse information, support forecasting and increase operational capacity.

But simply being able to say that your company “uses AI” will not automatically make it more valuable.

What matters is the commercial impact.

Can it improve margins? Increase capacity? Provide better management information? Improve the customer experience? Allow your people to spend more time on higher-value work?

Our view is that owners should understand where AI could create genuine commercial gains and have a credible strategy for its use.

Increasingly, buyers are likely to want to understand how a company is responding to technological change within its market.

The value comes from the outcome: better productivity, stronger margins, improved scalability and a more competitive business.

Buyers Need Something Left to Buy Into

A credible, partly proven opportunity can be very attractive.

If you have successfully entered one new territory, for example, a buyer may be able to see how that model could be replicated elsewhere.

If a new service has gained initial traction, they may see an opportunity to accelerate it using their own resources, contacts or capital.

The strongest growth opportunities are supported by evidence, market knowledge and realistic financial modelling.

They are not simply ideas written into a forecast.

As we explain in 5 Things that will Drive Your Business Valuation Up, buyers are considering not only risk, but also strategic fit and opportunity.

Show them what could happen next.

Start Growing for Your Exit Before You Need to Sell

If you know you would like to sell your business eventually, you have one significant advantage… time.

Starting two, three or even five years before a potential exit gives you time to make changes and, importantly, demonstrate that those changes have worked.

You may be able to strengthen margins, develop recurring revenues, recruit senior people, reduce customer concentration and gradually step away from the day-to-day operation of the business.

What matters is that improvements have time to become part of the company’s track record.

Waiting until you are ready to sell can limit your options.

By that point, there may simply not be enough time to address some of the issues that could influence buyer confidence or value.

Our article Preparations for Sale that Truly Make a Difference looks in more detail at what owners should be considering three to five years, two to three years and around 12 months before a potential sale.

If you want a broader overview of the journey, download our SELL – The 30-Minute Guide to Preparing Your Business for Sale.

Growth Is Only Valuable If a Buyer Believes It Can Continue

There is an important difference between growth and valuable growth.

A company growing quickly because its owner is working 70 hours a week, margins are being sacrificed or one customer has suddenly doubled its orders presents a very different proposition from a business producing controlled, profitable and repeatable growth.

Ultimately, a potential buyer needs to understand three things:

1. What has driven your growth.
2. Why that growth can continue.
3. How they can take it further.

Get those elements right and you do more than build a bigger business.

You build a more resilient, transferable and attractive one.

How Exit-Ready Is Your Business?

Our Exit Readiness Assessment asks 10 questions and provides an instant personalised report highlighting potential strengths, risks and areas that may need further attention.

Assess Your Exit Readiness

Or, if understanding value is your starting point, use our Business Valuation Calculator to obtain an initial indicative valuation range.

If you are thinking about selling your business within the next few years, an early conversation can help you understand where you are today and which changes could have the greatest impact on future value.

Arrange a confidential conversation with one of our Directors to talk through your plans, timing and priorities.

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