Time to Sell Your Biz?

To ready your business for its sale, you must frankly assess yourself and your company. Here's how.

Your company becomes ready to sell when someone else wants to own your business. Getting to that point means you did things right to create value in your business and that you continue to do things right to maintain profits and growth ( in that order ).

It doesn't mean that you merely start marketing your business to potential new owners.

Start with yourself. One of a prospective buyer's first questions to you the owner: "How important are you in making the business run?" The more important you are, the less valuable your business to a buyer.

Why? Because the more important you are, the less time you can dedicate to important strategic issues that make your business truly profitable.

Make yourself operationally irrelevant in your business. Don't stop working - just make yourself unneeded for day-to-day operations to stay great.

Become a passive owner. Decide what you want to work on and where you add the most value. This makes buyers want to own your business and makes your business more successful today.

Think about your market's real size. Saying no to a potential customer comes hard to a business owner.

Fail to learn how to do this, though, and you remain fundamentally ineffective and inefficient in your company. Companies that try to service every potential customer are inefficient. Potential buyers want to own companies that honestly realize nobody can be all things to all people.

The latter companies also make lots of money.

Have you systematized your business? Lots of owners like to make things up on the fly. I promise you that your employees don't want to do this: They want to know precisely what to do and see the excellence in what they do.

They can know this only by having systems - the simpler the better - that work. You want systems that allow your staff to do right for both your customers and the business. As a boss, I always ask employees, "How can I make your job easier and create a great experience for our customers?"

Figuring out how exactly you do things right means involving the employees who actually do the work; finding where each process in your business begins and ends; pinpointing customers' needs; delegating specific responsibility for improving each process that needs it; corralling agreement on what needs improving; and documenting what processes need improving and how to make them better, among other steps.

Does your business dashboard give you great information? Dashboards are graphics that help monitor how your business operates, such as depicting sales performance by territory. Good passive owners monitor a company's operations daily, weekly and monthly. Passive owners with great dashboards avoid nasty surprises.

If operations and numbers start to move in the wrong direction, you must know who to call and hold responsible. Start with information that lets you know what's going on without you having to intrude on your business operations.

Are you doing two things all owners need to do? First, make sure your business provides products your customers want to buy. Second, make sure your business achieves an adequate return on investment.

No matter how good you get at delegating operational responsibilities, keep these two details as your responsibility.

Taking care of the above points makes your business interesting to potential buyers and gives you and your business, like all that are sale ready, more success and options today.

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Josh Patrick is a founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to the NY Times You're the Boss blogand works with owners of privately held businesses helping them create business and personal value. You can learn more about his Objective Review process at his website.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.