Key Questions Every Business Owner Needs to Ask Themself

Before you consider selling your business, there are some key questions you need to ask yourself. Is your business transferrable? Is the talent transferrable? Are the customer relationships transferable? This checklist will help a business owner get a little introspective and take a gut check regarding the status of their business.

Is Your Business Transferrable?

Any prospective buyer is going to be interested in the value your business can offer. The value of your business is an indication of the profitability they can expect to yield by assuming ownership of every profit and cost center your business offers. Business owners can rely on a professional to determine an accurate valuation on an annual basis. You should also consider gathering two or three years of your business tax returns.

Another important detail to consider is your structural capital. You will want to consider what processes you have in place. A prospective buyer will want to have a strong understanding of your operations, including payroll, accounts payable, and how you feed the pipeline. Technology is another critical item to document ahead of selling your business. 

Speaking of proprietary – does the success of your business hinge on intellectual property that you have developed or otherwise own? That’s a critical feature that you need to capture, because those tools will be beneficial to the prospective buyer and also provide a potential revenue stream they could realize later.

  • Conduct an annual valuation to give a prospective buyer a third-party opinion of what your business is worth
  • Gather business tax returns for two or three years or more to show actual revenue and expenses
  • Document company processes to give the buyer a short hand look at how to keep operations up and running and ensure a smooth transition
  • Develop a list of technology tools that are essential to the success of your business
  • Itemize intellectual property that your company owns and could potentially monetize

Is the Talent Transferrable?

Most business owners agree: your people are your biggest and best asset. Your team represents a nimble, experienced engine that helps your company go every day of the year. 

A prospective buyer will want to take a look at the roles you’ve filled and the talent that comes with those roles. The good question to ask is – are the right people doing the right roles? Consider restructuring your team to capitalize on the talents of your team. In some cases, this may mean that you have to make some hard decisions about your personnel. Know that transitioning out any existing team members presents a short-term pain but will ultimately help strengthen your operations.

Existing professional development or training programs will be important to capture, too. Your prospective buyer will want to know how you’re investing in your team.

  • Codify team structure and duties that gives a prospect an idea of the team they will inherit and rely on to maintain business success
  • Evaluate whether each person is in the right role. This may mean restructuring your team to ensure each person is fulfilling a role in which they will succeed
  • Transition team members who do not fit with future – Transitioning out team members is a short-term discomfort that will ultimately help optimize your team for culture and productivity
  • Create a list of professional development/training programs that support employee advancement.

Are the Customer Relationships Transferrable? 

Your prospective buyer will want a deep understanding of the customers you work with, including your personal relationship with the owner of the business, including the length of the relationship. It might also be good to think about your customer relationships like a zipper: are there other team members who ladder up to other contacts within your customer organization? You will also want to articulate what your pipeline looks like and whether there are prior clients that your firm should touch base with to cultivate business.

  • Capture your current customer details including success points, length of relationship, depth, and contract details
  • Zip It Up: Be able to show that other people within your organization have their own relationships with contacts in your customers’ businesses
  •  Develop a pipeline list that captures prospects in your sales funnel, including what stage of sales conversion and revenue. 
  • Document existing or previous customers that offer a business potential. 

Some of these questions and supporting details pose a bit of a gut check. Are you ready to sell your business? Some business owners may feel like they’re in a great position to divest, but there’s a chance that you might be reading this list and evaluating what you need to tackle to improve your valuation. This checklist of items can seem overwhelming, but we can help.

Sunbelt Business Advisors can be a trusted partner to help walk you through this process. We have over 50 years of experience in helping our clients through the process of determining a valuation of their business, getting their business ready for market, and connecting them with the right prospect buyers. Contact us* for more information on how we can help you take your next big step.

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