Many agency owners pour immense effort into scaling their operations yet often overlook a critical aspect: preparing for an eventual sale. Surprisingly, less than 10% of small business owners manage to sell their companies, primarily due to inadequate exit planning. For marketing agency owners in the United States contemplating their future steps, understanding how to cultivate a business that's appealing to buyers from the outset is imperative.
Building a Business with Future Sales in Mind
Step 1: Develop Operations That Are Independent of You
A key attraction for buyers is a business that operates smoothly without its owner's constant presence. This requires well-documented systems and clear processes. Nathan Hirsh, the founder of FreeeUp, who successfully sold his business, underscores this: if you're the main engine of your company, it diminishes its attractiveness to potential buyers. The goal is to establish a framework where your team can function effectively, regardless of your presence.
Expert Advice:
Document every operational step, from client onboarding to daily tasks, and ensure these guidelines are concise and accessible.
Implement automation tools to handle repetitive tasks, enhancing efficiency and reducing errors.
Train your team to manage operations seamlessly in your absence. A true test of this is taking a vacation without business operations suffering.
Leona Watson’s Experience:
Leona Watson shares that the pivotal move for her was to start her day later, allowing her team to operate without her interference. This shift from improvisation to documented procedures minimized disruptions and empowered her team.
Your Action Step:
Allocate an hour each week to document and delegate at least three key processes within your business. This could involve automation or training team members to take over these tasks.
Step 2: Establish a Brand That Transcends Your Personal Identity
Many small businesses are closely tied to their owner's persona, which can be a detriment when you're ready to sell. Michael Hyatt exemplifies a successful transition through his rebranding from ‘Michael Hyatt’ to ‘Full Focus,’ aiming to reflect the business's growth and its independent identity beyond his personal brand.
Expert Advice:
Develop a brand identity that stands apart from your personal name, utilizing product names and branding across all marketing channels.
Promote your team’s expertise in your marketing efforts to shift the brand association from yourself to your business as a collective.
Focus on building customer loyalty to the business's offerings rather than to you personally.
Photographer Sue Bryce’s Insight:
Sue Bryce, who built a million-dollar business, emphasized the importance of detaching personal identity from the business. Her realization, "I am not that important," significantly changed her approach and success.
Your Action Step:
This weekend, ponder Sue’s perspective and evaluate how your brand is still connected to you. Plan one strategic move to enhance your business’s independent image.
Step 3: Maintain Healthy Financial Practices
A financially sound business is invariably more attractive to buyers. It's essential not only to maintain profitability but also to ensure that your financial records are meticulous and growth-oriented.
Expert Advice:
Keep financial records accurate and current with reliable accounting software.
Prioritize profitability over mere revenue; substantial revenue is futile if not paired with good profit margins.
Regularly review your financial statements to identify and rectify issues promptly.
Your Action Step:
In your next meeting with your accountant, take extra time to scrutinize your financial records. Look for cost-saving opportunities or areas to enhance efficiency, thereby boosting profitability. You might discover unnecessary expenditures that can be cut.
Building to Sell
Now it’s your turn to apply these insights. Document a business process, develop your brand’s independence, and review your financial health. These steps are designed not just to prepare your business for a sale but to foster a self-sustaining and thriving entity.
Conclusion
Building a business with a potential sale in mind requires foresight and a shift from personal-centric operations to creating a self-reliant entity. The most significant error a business owner can make is neglecting to prepare for this transition. By focusing on these foundational elements, you position your agency not only for ongoing success but for a profitable future sale.
If you want to take your agency to the next level, connect with us today.