You can't change history! As much as we would like to sometimes.
Although, some business owners still try to wind the clock back!
Every day in business we are creating a history for the business. Every single thing that happens in the business is there for everyone to see – including future potential buyers of the business. And that’s why I keep emphasising to business owners “be aware of the history you are creating.”
One of my mantras is “Know your numbers and keep the right ones going up!”
A business is much more attractive to a buyer when there is a history of the numbers going up! The most important numbers are ‘maintainable adjusted net profit’ to the owner, turnover, and gross profit on sales. The longer they have been going up the better but at least over the last three years.
Steady growth is preferred by most buyers and analysts, not sudden increases or decreases. Consistency is very important and spread over a good diverse mix of clients. (One or two major clients is a risk to the business. See my blog post "The most dangerous number in business!)
It can take years to get to this ideal state.
Many businesses I get to look at simply do not have well constructed systems and processes. Often missing is a “marketing and sales process”. Having a well mapped out client acquisition process is absolutely critical to keeping the business growing. Knowing your numbers is vital to keep the profit going up. Maintaining consistency over time is crucial for the owner to have a great business and for any prospective buyers.
This is why every business owner who has any ambition at all to sell their business one day, and cash out with a good sale, needs to be planning and preparing their business ready for sale EVERY DAY.
A business that is ready for sale will run without the owner having to work in the business. It will be much more successful and will attract buyers. This is the situation you want to be in so that you can have options to sell for the price you want, when you want to.
Don't forget a business that's ready for sale is well worth keeping! You want to be be in control of the whole process.
There are many more areas that need to be considered in addition to the numbers and client acquisition. Make it easy for a buyer (and yourself) to see what is happening in the business. Keep your eye on the ball all the time and don't think you can change your history down the track. You can't. What's done is done. Do it right every day.
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