Maximize the Value of Your Startup From Day One

A few years ago, while launching a startup, I was struggling to find a good name for the business. When I took my struggle to a respected friend and mentor, he surprised me with his first piece of counsel.

"Choose a name," he said, "that will enhance your brand value should you ever decide to sell the business."

Until that moment I was totally consumed with merely starting the business. Selling it was the farthest thing from my mind. But it was amazing to me what happened when I started thinking about the business in terms of possibly selling it someday.

Positioning a Small Business to Be Bought

As a business leadership coach I had guided a number of business owners through the process of growing their own business and profiling it for sale. I had coached them on how to look at their business through the eyes of a potential buyer. And I had helped them explore ways in which to increase the perceived value of their business.

So I knew the drill for positioning a small business to be bought. But ironically, I wasn't thinking about my own startup in terms of its ultimate marketability.

And candidly, I reacted initially to the mentor's counsel somewhat dismissively. "I'm a long way from selling this baby," I thought.

On further reflection, however, I asked myself, "What harm would there be in approaching this business from day one as though I plan to sell it someday?"

And that one change of perspective had an immediate and telling impact on the decisions that I made about the business.

Gone was any notion of my own name appearing in the business name. Otherwise, an eventual buyer would evaluate the business knowing that it had to be renamed. Had to be rebranded. And rebranding it would cost new ownership the market recognition and the credibility that the business had built up under my tutelage.

As a result, astute buyers would discount the price that they were willing to pay me for the business. So in something even so seemingly mundane as naming the business, maintaining the buyer's perspective helped me make more informed decisions.

Other Scenarios for Selling a Business

And the payoffs kept coming. Not only did I begin thinking about profiling the business so that it could be sold someday, I also started running other scenarios.

  • What if something happened to me, and my wife needed to sell the business?
  • Or what if something tragic happened to both of us, and our children were charged with selling it?

In short, what would outsiders find if they stepped in on short notice to operate the business? Would the documentation, records-keeping, and management systems be clear enough that they could quickly make sense of how the business functioned? Could they immediately identify who our client's were and where we stood in terms of contractual commitments to each of these clients?

I soon realized that the best way to provide for such contingencies was to ask myself continually, "If someone came along today and wanted to buy this business, what would I need to get in place before I could sell it at maximum value?"

That question kept me focused on keeping records up to date, watching my margins and cash flow more carefully, and constantly searching for best practices that would keep me ahead of the game.

All of this made the business itself more efficient and more profitable. And it made the pressures of business ownership far less intense.

So let me repeat the counsel which my mentor offered me: whether you ever intend to sell your business or not, having it "market ready" at a moment's notice will make the entire entrepreneurial experience more rewarding, both financially and personally.

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