Two owners I work with are looking into selling their businesses. One of them noted the benefit of thinking about the due diligence in decisions on a regular, month to month basis.
"Why", I asked.
"Because if I feel embarrassed about it, then I know to step back and ask what's wrong with it, and what would make me proud of it instead."
It's reminded me of why looking at your business through the eyes of a potential buyer is so important: it keeps you focused on the things that matter for value. Your profit and growth; your people and processes; and your sustainability or scalability.
As a business owner, you enjoy the freedom to make the decisions you see fit. So why bother with taking time to consider a future buyer's perspective?
If you're strong for a buyer, you're strong for yourself.
Now is it worth organizing your records so the due diligence is always ready or doing business valuations? That's not a given. But it will have value to step back on a periodic basis and ask "What would increase the value of my business in the eyes of a buyer?" It gets me out of the weeds, and thinking with the end in mind. Often, owners become experts at making payroll and breaking even. Since a buyer doesn't value that as much, the question helps change the perspective.
It also gives you some clear metrics to manage against. You can rate 5 factors:
- Profit
- Growth
- People
- Process
- Sustainability/Scalability
Jim Henderson
The Exemplary Group
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