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Tag: Selling a Business

  • 6 Startups That Found Buyers in 2 Years or Less

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    Setting a business up for a successful exit usually takes a while. Whether a company files for an initial public offering or receives a compelling buyout offer, it generally has to first spend several years building a solid customer base. But every now and then, startup founders cash out quickly.

    Selling a company isn’t everyone’s measure of success. Some founders aim for a different exit or launch a company with no intention of leaving it. Others might want to stay around, but investors push for an exit to see returns on their money.

    Still, a select group of entrepreneurs have been able to sell their startups for substantial payouts before those businesses hit their second birthday. That’s especially noteworthy as many founders don’t tend to stick around a business for the long term. A Harvard Business Review study from several years ago found that less than half of founder/CEOs continue to run the business after three years and fewer than 25 percent are in charge when a company goes public.

    Perhaps even more striking is the fact that most of the companies that have achieved this rare feat are still either around or have become a key part of their new parent company.

    Chad Hurley, Steve Chen, and Jawed Karim: YouTube

    Hurley, Chen, and Karim founded YouTube in February 2005 – on Valentine’s Day. Within nine months, the site had hosted a video that collected one million views. While it wasn’t the first video sharing site (Vimeo had been founded the year before), it quickly went viral – and the uploading of Saturday Night Live’s “Lazy Sunday” sketch sealed that. On November 13, 2006, YouTube was purchased by Google for $1.65 billion, a record-breaking amount at the time.

    Kevin Systrom and Mike Krieger: Instagram

    Systrom was a Google employee when he built the forerunner to Instagram called Burbn. Krieger was an enthusiastic user of that app and the two eventually began working together to create what would become Instagram. The company was formally founded on Oct. 6, 2010. Meta (then Facebook) bought it for $1 billion on April 9, 2012.

    Stewart Butterfield and Caterina Fake: Flickr

    Founded in February 2004 by Butterfield and Fake, Flickr made its debut at the O’Reilly Emerging Tech conference in San Diego. Originally engineered as part of a multiplayer online game, the site evolved and made photo sharing a common online activity. By the following March, Yahoo acquired the company for $35 million, helping it to scale its infrastructure to keep up with demand. Butterfield would go on to found office communication tool Slack.

    Sabeer Bhatia and Jack Smith: Hotmail

    Smith, who was an Apple employee, came up with an idea for anonymous web-based email, teaming up with a coworker Bhatia to launch Hotmail on July 4, 1996. Microsoft liked what it saw and made a $400 million offer the following December, incorporating it into the Windows live suite of products. The service was eventually incorporated into Outlook.com.

    Mark Pincus: Freeloader.com

    Freeloader was one of the first “push” software sites, offering free games to users, supplemented by advertising. Pincus founded the startup in 1995 and found a buyer just seven months later: Individual Inc., which paid $38 million for the company. Changes in the advertising market led to the company shutting down the site in 1997. Pincus stayed a part of the gaming, eventually launching Zynga in 2007, which he took public in 2011 (and which is now a part of Take-Two Interactive Software).

    Marc Lore: Jet

    Lore had some experience with exits when he founded this retail site. He had already sold his startup Diapers.com to Amazon for $545 million. But when he launched Jet.com in April 2014, something clicked. In 2016, Walmart bought Lore out, paying $3.3 billion for Jet in hopes of expanding its e-commerce arm. Four years later, it shut Jet.com down and phased out the brand, but CEO Doug McMillon said Jet had helped Walmart jump-start the progress it had made with its online retail business in that time. Lore continued to work with the retail giant through 2021.

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    Chris Morris

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  • What I Learned After Selling My Company to Snapchat for $54 Million | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In 2014, Snapchat acquired our startup, Scan, for $54 million, back when QR codes were still relatively new.

    Most people hadn’t tried them, and phones didn’t support them natively. The technology was promising, but the experience wasn’t, so it sat behind a clunky UX. We removed that friction and made QR codes easier to create, scan and deploy, which led to quick adoption.

    The deal with Snapchat was seamless, not because of flashy decks or famous backers, but because they saw how we were focused on closing a real usage gap, how we moved fast and were aligned with their larger vision.

    For any founder hoping to build a lasting company or one day sell it, I’ve found that success boils down to a few core principles I’ve learned along the way.

    Related: What I Wish I Knew Before Selling My Company

    1. Build what people actually use

    Too many founders begin with presentations or investor outreach before proving their product. From day one, Scan was grounded in user need. We built it to let people easily scan and generate QR codes, nothing fancy, just functional and straightforward.

    Just like with any startup, we didn’t raise capital immediately. We did, however, start early, pay attention to all helpful comments, and make changes often. Shortly after, that strategy helped the app get more than 1 million downloads. By the end of 2012, Scan had more than 25 million apps installed. A couple of years later, we had more than 100 million copies of the product downloaded around the world.

    That user traction was more persuasive than any pitch deck could have ever been. It proved product-market fit, a signal investors and acquirers value above all else. When starting a business, ensure you have the end users in mind and iterate frequently, rather than investing energy in hypothetical demand. Remember that real usage always beats hypothetical value.

    From the start, my co-founders and I aligned on roles and equity. That early clarity, splitting equity equally and playing to our strengths, helped us stay focused and avoid internal friction, which kills many startups before they begin.

    2. Design with a buyer in mind

    By the time Snapchat reached out, Scan was already built for scale, fully localized, with creation tools that teams could use anywhere. The real alignment clicked when Snap wanted a scannable identity baked into a camera‑first experience.

    In Q1 of 2015, Snapcodes launched on top of Scan’s core stack. The integration worked seamlessly because we engineered for extensibility, tuned reliability to survive low-light and low-ink prints and planned use cases beyond our original app.

    Design for ecosystem fit from the start if you’re a founder hoping to get your business on an acquirer’s shortlist. Keep an eye on the metrics that are important to them, such as mistake rates, time-to-first-scan and activation. Next, look for integration abilities like compliance, dependability and APIs. The discussion swiftly moves from “What if?” to “How soon?” when strategy and culture are in sync.

    3. Know your numbers and what it’ll take to win the deal

    One detail that almost derailed the acquisition was the initial financial structure. Our seed investors had a liquidation preference that meant anything below $54 million wouldn’t deliver meaningful returns to founders or early backers.

    Snap’s first offer came in below that line. With guidance from our lead investor, we held firm. He reminded me: “You haven’t gotten a good deal until you’ve said no three times.” That mindset gave us leverage when it mattered most.

    We used speed as our lever and told Snap that if they met our number, we could start integration immediately. That clarity closed the gap, and we signed at the threshold we needed to reach.

    If you’re raising or preparing for an exit, know your cap table cold. Map the preference stack (seniority, multiples, and whether prefs are participating) plus option‑pool top‑ups and any SAFEs or notes. Define your walk‑away point. Keep in mind that leverage isn’t only about price; execution speed, a specialized team and defensible IP can all move the terms.

    Related: You Need to Make These 5 Moves Before Selling Your Business

    4. Every dollar must drive momentum

    After raising roughly $2 million in seed funding, we felt confident, but confidence can be a misleading indicator.

    Without a strict plan, we overhired, signed a high-end lease in downtown San Francisco, and delayed experimenting with monetization strategies. Cash was used too quickly, and we nearly ran out of runway within months.

    That near-crash taught me that funding isn’t in any way a safety net but a responsibility. Each dollar must contribute to measurable momentum. Hire deliberately, test revenue early and protect a six‑month cash buffer. Flashy growth comes and goes, but durable advantage comes from operational discipline with a focus on the work that actually moves the business. That kind of financial and strategic clarity is often a key signal that you’re ready to sell, when the business can operate independently, growth is consistent, and decisions are rooted in fundamentals rather than rapid changes.

    5. Build for freedom, not just an exit

    One thing I’d do differently is hold onto more gratitude. It’s easy to get caught up in momentum and miss the meaning, especially when building with friends.

    Selling the company gave us perspective and room to breathe. The real lesson wasn’t in the money, but in building with purpose, creating space where creative teams do their best work and shipping technology that supports human well-being.

    That’s the focus at my current company, at the intersection of AI, performance, and mental health. I’m applying those same lessons with more intention, clearer outcomes and steady, user-guided iteration.

    For founders, treat an acquisition as a checkpoint. Use it to recommit to the pain points worth solving, the people you want to scale with, and the impact you intend to leave. Execute with focus.

    In 2014, Snapchat acquired our startup, Scan, for $54 million, back when QR codes were still relatively new.

    Most people hadn’t tried them, and phones didn’t support them natively. The technology was promising, but the experience wasn’t, so it sat behind a clunky UX. We removed that friction and made QR codes easier to create, scan and deploy, which led to quick adoption.

    The deal with Snapchat was seamless, not because of flashy decks or famous backers, but because they saw how we were focused on closing a real usage gap, how we moved fast and were aligned with their larger vision.

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    Kirk Ouimet

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  • When’s the Best Time to Sell Your Business? Here’s What I Tell My Clients (And It’s Not When You Think) | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Over the past 10 years, when do you think was the best time to sell a business?

    Believe it or not, it was just after the pandemic. In June 2024, the U.S. Department of the Treasury reported that American business investment had exceeded expectations, outperforming pre-pandemic projections by $430 billion. “The outlook for future business investment growth is encouraging,” the report stated. “Firms are observing persistently high returns to their capital, and founders are starting new businesses at historic rates.”

    Across industries, 2020–2022 outperformed even 2019 in many metrics. Manufacturing, for example, “surged back” in Q3 2020 with record gains in output and hours worked, according to the U.S. Bureau of Labor Statistics.

    The real lesson: It’s not about timing the market

    You don’t sell based on headlines. You sell based on your business, your industry, and your momentum.

    Company valuations have stayed remarkably consistent over the past 25 to 30 years — even during recessions like 2008–2009. Waiting for the “perfect” economic moment to exit is a common mistake that often leads to missed opportunities.

    One of our software clients was nearly ready to sell last year. But their industry began heating up so fast, we advised them to hold off. They now have a 10-year growth runway — and a chance to exit at a significantly higher valuation. On the other hand, we had a client in the print-and-postage business who waited too long. They ignored clear signs of declining demand. By the time they were ready to exit, their window had closed — and so had their leverage.

    The point: There’s no universal “right time” to sell. There’s only the right time for your business, in your industry.

    Related: When Should You Get Your Business Ready to Sell? The Best Time to Start Is Now — Here’s Why.

    Three steps to build value in uncertain markets

    Economic volatility causes many owners to second-guess their exit plan. Should I move faster? Should I take the first good offer?

    In most cases, the answer is no. Instead, refine your original plan with three key adjustments:

    1. Prioritize profitability over revenue

    Buyers don’t pay for top-line growth — they pay for what drops to the bottom line.

    One of our marketing clients was bringing in $5 million in revenue but losing $200,000 annually. After focusing on profitability, they trimmed revenue to $3 million but turned a $220,000 profit. That leaner, more profitable business was ultimately worth more — and attracted better buyers.

    2. Build operational efficiency

    A well-run business is more attractive, more resilient, and easier to sell. Aim for:

    • Fewer people delivering the same output
    • Documented, replicable systems
    • A team that can run the business without you

    Buyers want to see a machine that works — and still has room to grow.

    3. Stay realistic about valuation

    Remember Quibi? The mobile streaming platform launched with $1.75 billion in funding — and folded in six months. Or any Shark Tank episode where founders get laughed out of the room for unrealistic projections.

    Valuation isn’t about hype. It’s about performance, predictability and market reality.

    So when is the right time to sell?

    Here are two signs we see consistently:

    • Growth takes more effort for less return.
    • You start thinking, “I’ve got a couple good years left in me.”

    Those thoughts are signals. Don’t ignore them. They’re often the earliest signs that it’s time to plan your exit.

    The market moves, but your strategy shouldn’t

    Selling a business takes time — sometimes years — especially if you want to maximize value. Public markets fluctuate daily. But private business sales operate on a different timeline and follow different rules.

    The buyers are different. The financing is different. The valuation metrics are different.

    So don’t rush. Don’t panic. And don’t let headlines distract you from your long-term strategy.

    Related: Sell Your Company When You Least Expect It — How to Properly Scale and Sell Your Business

    Final thought: Focus on what you can control

    The best time to sell isn’t about market timing — it’s about business readiness.

    Ignore the noise. Focus on profitability, operational health, and what’s actually happening in your sector. That’s where real value lives — and where the best exits are made.

    Stay strategic. Stay grounded. And don’t sell your business short.

    Over the past 10 years, when do you think was the best time to sell a business?

    Believe it or not, it was just after the pandemic. In June 2024, the U.S. Department of the Treasury reported that American business investment had exceeded expectations, outperforming pre-pandemic projections by $430 billion. “The outlook for future business investment growth is encouraging,” the report stated. “Firms are observing persistently high returns to their capital, and founders are starting new businesses at historic rates.”

    Across industries, 2020–2022 outperformed even 2019 in many metrics. Manufacturing, for example, “surged back” in Q3 2020 with record gains in output and hours worked, according to the U.S. Bureau of Labor Statistics.

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    Jessica Fialkovich

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  • Why Every Entrepreneur Needs an Exit Mindset from Day One | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    After three decades in capital markets and entrepreneurial ventures, I’ve learned one hard truth: Most founders wait too long to think about their exit. They’re focused on growing the business, product-market fit, hiring the right people or raising their next round, and understandably so. But here’s the reality: The companies that scale, endure and lead are the ones built with the end in mind.

    Having an exit mindset doesn’t mean you’re planning to abandon ship. It means you’re architecting your business with intention and strategic foresight. Whether your future includes an IPO, a SPAC merger, a venture-backed acquisition or simply attracting long-term capital, an exit mindset forces clarity. It requires discipline. And it ensures you’re building not just for now but for what comes next.

    Related: Starting a Business? You Should Already Be Thinking About Your Exit Strategy. Here’s Why.

    I learned this the hard way

    During the Great Recession, I lost everything. Years of work and millions in value disappeared seemingly overnight. That moment was both devastating and instructive. I realized that while I had been focused on growth and momentum, I hadn’t built with durability in mind. I hadn’t built to exit; I’d built to run.

    Coming back from that loss forced me to rebuild from the ground up and reimagine what success really meant. I leaned into the volatility instead of resisting it, and over time, that shift led me to support other founders navigating the capital markets, helping them structure for growth and prepare for their own exits.

    I noticed a pattern: The most successful entrepreneurs weren’t necessarily the smartest or the most well-funded. They were the ones who led with clarity, who built their businesses with the intention to exit, whether that meant selling, stepping back or scaling beyond themselves.

    Exit is a mindset, not a milestone

    Going public or selling your company shouldn’t be a last-minute decision. It can (and should) take years, as a natural progression of a business built on solid fundamentals. That starts with a clear answer to one question: What are you building toward?

    If your answer is vague or reactive, it’s time to revisit your strategy.

    An exit mindset helps you:

    • Build toward investor-grade readiness: This includes predictable revenue, clean cap tables, strong corporate governance and a scalable operating model.

    • Attract the right capital partners: Investors can sense when a business has long-term value versus short-term hustle.

    • Avoid short-term traps: When you’re playing the long game, you’re less likely to overpromise, overhire or overextend.

    Related: 4 Go-To Moves to Help Start Your Exit Strategy Now

    Think like a public company (even if you’re not one yet)

    Entrepreneurs often underestimate the rigor and transparency required to go public or raise institutional capital and often think of an IPO or acquisition as a finish line. But it’s not a finish line, it’s a new starting gate. And the market doesn’t hand out second chances.

    If you want public markets, investors or strategic acquirers to take you seriously, you need to demonstrate:

    • Financial maturity: Are your books audit-ready? Do you understand your KPI and unit economics? Can you forecast with precision?

    • Strategic clarity: Do you have a clearly articulated long-term vision? Can you tell a compelling growth story?

    • Operational resilience: Have you built processes that scale? Do you have a team that can lead beyond you?

    I tell the entrepreneurs I work with that the stock doesn’t trade itself. A great business is not the same as a great public company. The companies that perform post-IPO are the ones that prepared for the scrutiny long before the bell rang.

    Lessons from the frontlines

    Over the past few years, I’ve seen how volatile and unforgiving the IPO and public markets can be. In 2021, deal flow was booming. In 2022 and 2023, it all but froze. Yet in that same period, a handful of companies thrived. Why? Because they had built with optionality in mind.

    Take CAVA Group, for instance. In a tough IPO market, they went public in 2023 and saw their stock jump 37% on the first day. That didn’t happen by accident. It was the result of strategic decisions made years earlier: disciplined growth, strong financial performance, well-crafted storytelling, focused leadership and the ability to meet investor expectations.

    Don’t just raise capital. Rehearse the exit.

    Too many founders treat fundraising like a finish line. But capital is a tool, not a strategy. If you raise money without a clear exit roadmap, you risk dilution, misalignment, or worse, getting stuck in the middle.

    Instead, start with the exit in mind. Ask yourself:

    • What would a strategic acquirer find most valuable about my business?

    • If I were to list tomorrow, are my systems, controls and structures ready?

    • Do I have the right team and board to guide me through a real transition?

    The earlier you ask these questions, the more optionality you create. And in this volatile market, optionality isn’t a nice-to-have. It is your edge.

    Related: How to Expertly Position Your Business for an Exit

    Build to exit, lead to endure

    The paradox is real: The strongest exits come from businesses that aren’t built just to exit. They’re built to endure. They have resilient models, committed teams and founders who lead with transparency and purpose.

    An exit mindset doesn’t mean you’re pulling back. It means you’re more strategic and leading with vision. It doesn’t mean you’re ready to walk away; it means you’re building something that can outlast you.

    So, whether you’re on your first round or your fifth, ask yourself: If I had to exit tomorrow, would I be ready?

    If the answer is no, you’re not alone. The time to start building with that end in mind is now.

    After three decades in capital markets and entrepreneurial ventures, I’ve learned one hard truth: Most founders wait too long to think about their exit. They’re focused on growing the business, product-market fit, hiring the right people or raising their next round, and understandably so. But here’s the reality: The companies that scale, endure and lead are the ones built with the end in mind.

    Having an exit mindset doesn’t mean you’re planning to abandon ship. It means you’re architecting your business with intention and strategic foresight. Whether your future includes an IPO, a SPAC merger, a venture-backed acquisition or simply attracting long-term capital, an exit mindset forces clarity. It requires discipline. And it ensures you’re building not just for now but for what comes next.

    Related: Starting a Business? You Should Already Be Thinking About Your Exit Strategy. Here’s Why.

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    Peter Goldstein

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  • How to Tell Employees You’re Selling The Business | Entrepreneur

    How to Tell Employees You’re Selling The Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The process for exiting a business is about so much more than numbers and contracts; it’s about the people in your organization, from the front-line employees and executives who have created the business’ value to the leadership team that lands the deal at the most favorable terms. Your people have been at the heart of your organization, but their involvement in the exit process needs to be thoughtful and delicate – requiring trust and discretion. Here’s how to support them throughout the transaction.

    Before the sale — say nothing

    When should the owner inform employees that the business is being sold? Not until the sale is final and the buyer has officially taken possession. That’s the number one rule: Only the owner, their transition team and possibly one critical team member should know about it until after the transaction is complete.

    Prematurely revealing this information can have several adverse results:

    • Early departure: Hearing about a pending sale can cause fear and uncertainty. Employees often assume the business is for sale because it’s failing, or they worry that they’ll be let go by the new owner. They may leave before the sale is finalized, hurting the company’s value.
    • Legal challenges: The seller must certify to the buyer that the staff is in good standing. Early departures could make this look like a misrepresentation, and the buyer could sue, try to back out or otherwise undermine the transaction.
    • Delayed transition: A strong, stable team can be a significant value driver. Buyers often write contingencies into the transaction to ensure key staff members stay. If there isn’t a strong team, the owner might need to stay on temporarily to facilitate the transition.
    • Demand for compensation: Knowing their value in the deal, employees who learn of the sale might demand bonuses or raises as inducements to stay. Granting them can affect profitability and sale value, not to mention the discomfort of feeling like the deal is being held hostage.

    Without adequate precautions, keeping your plan under wraps could be easier said than done.

    Related: 7 Preparation Essentials for Selling a Business

    Maintaining confidentiality

    Your company may have such a well-cultivated grapevine that you sometimes feel you’re the last to hear your own personal news. Most breaches of confidentiality occur when owners try to handle everything themselves without professional guidance. Keep your in-the-know list small by recruiting a team of experienced advisors who will ensure discreetness and protect sensitive information about company operations, customers and employees.

    Sometimes, you may have to inform a key employee about the sale early in the process — a top salesperson, the CEO or someone else. Do this as the last step of due diligence, and be sure it’s handled with strict confidentiality agreements.

    What if someone finds out despite your best efforts? Your response depends on where you are in the sale process. If it’s early, you can say you’re exploring partnerships or considering offers without actively shopping the business. “Everything is for sale if the right offer comes along” is truthful but vague enough to quiet rumors. If those strategies don’t work, you may have to get transparent and insist they sign a non-disclosure agreement.

    Announcing the sale

    Once it’s final, communication should be strategic and focus on the positive. If you’ve handled the sale proactively, you should have no trouble presenting it as good news – because it will be good news:

    You’re finally retiring and found the right person to continue your legacy. Other life changes are taking you in new directions, and the new owner understands the team and mission. The business is so successful it has attracted an owner who can take it to the next level.

    Start by informing the management team first. Provide talking points to help their teams navigate the transition. Then, have a full team meeting with both the seller and the buyer present. Celebrate the event, express gratitude to your staff—they’re the ones whose work attracted the perfect buyer—and highlight the opportunities that the new owner brings. For smaller companies, individual meetings with each employee can address personal concerns and questions.

    One of the first questions will be whether the new owner will let people go or make other significant changes. This shouldn’t be a concern unless you’re a large company or corporation. Contrary to popular belief, employees are rarely let go in small to mid-sized business sales. Buyers typically want to retain the staff because they are integral to the business’s success. The goal is to maintain a stable and strong team post-sale.

    Related: I Specialize in Exit Planning — You Need to Make These 5 Moves Before Selling Your Business

    Training and transition

    The seller usually trains the buyer in business operations. This transition period can last up to a year, depending on the complexity of the business. Employees can see this as an opportunity to demonstrate their value to the new owners.

    New owners should avoid making significant changes for the first six months. Stability helps employees adjust to the new ownership without additional stress. Small, positive changes, like new benefits, can help build trust.

    At least during the transition, an open-door policy is essential. It allows employees to voice concerns and feel heard, which builds trust and can prevent minor issues from escalating into major problems.

    Believe in your team

    People are one of the top value drivers in a small-to-mid-sized organization, and this holds true in a sale. Building a solid team and demonstrating their value through proper documentation and reporting can significantly enhance your business’s value. Planning and managing the transition carefully ensures a smoother process and preserves the company’s integrity and performance.

    Thoughtful preparation, strategic communication and professional guidance are the keys to successfully supporting staff when exiting a business.

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    Jessica Fialkovich

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  • The Key to Preparing Your Business for an Eventual Investment or Sale | Entrepreneur

    The Key to Preparing Your Business for an Eventual Investment or Sale | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Crafting an investment teaser for your business each year might seem premature if selling isn’t even on the radar yet. But this important forward-looking exercise does a lot more than prepare your business for an eventual investment or sale. It helps business owners visualize the pitch they would have to be able to give to achieve the business valuation of their dreams. The gap between what you would like to say and what you can credibly say is exactly where to focus your next frenzied period of energy and investment.

    My partner and I learned this the hard way. We sold two consulting firms about ten years apart. The first was to a strategic buyer at the lower end of the cash flow multiple range, while the second was to a private equity buyer at the higher end of the revenue multiple range. Yes, the market conditions were a little better the second time around. But the real difference was that we started focusing on how to maximize our exit multiple on day one. We kept a rolling sales sheet in our heads at all times, and were constantly rethinking investments that didn’t pass the sales sheet “smell test.”

    To get started with your first business teaser, put yourself in the right mindset. Remember, you are writing a forward-looking elevator sales pitch for your company aimed at getting an investment or strategic buyer to chomp at the bit. Visualize bounding into the tenth VC conference room of the day, rattling off the perfect narrative to an awed audience. This should include a deck chock-full of data and trend analysis with recent financial results that make it clear your business thesis is spot on.

    Related: Selling a Business Starts on Day 1: Here’s What Founders Need to Know

    Total addressable market

    Every good pitch starts with the total addressable market (TAM) discussion. You want to be able to showcase the team cherry-picked the fastest growing part of the addressable market in a highly disciplined way. You should have gained plenty of insights during the launch phase to more narrowly tailor this market and make the case for what products and services deserved the highest level of investment. If you don’t have those insights at your fingertips, this is the place to start.

    In our first business, investors yawned during the TAM discussion. We had only two entry points into a public company to buy our expensive consulting services. To make it worse, the number of public companies was in a slow state of decline. Not exactly a growth industry, even though we had grown revenue in excess of 30% annually for several years. In Business #2, we tweaked our service offering to support expanding our TAM from two business titles to eight, expanding our TAM nearly three-fold to $1 billion.

    Growth strategy

    The next section should cover the growth strategy. List and prioritize the business’s most important growth levers. Think of two or three home-run ideas that will really get the buyers nodding, not 12 weak singles. If your list is long and still feels a little like throwing darts at the wall, start narrowing. This is critical because you are going to swing for the fences with these by directing nearly all of your valuable business investments there.

    In our first business, we focused on a land and expand strategy. We made significant investments in external salespeople, custom marketing tools and company-sponsored networking events. It worked. We attracted a few large clients who provided the base of a referral network that is still feeding us today. The downside? It made scaling expensive, and introductory sales meetings became our total existence.

    Business #2 had far lower customer acquisition costs, which investors loved. We cracked the code on using thought leadership to open doors with potential clients and kept fine-tuning what they were most likely to read (real-world how to’s rather than deep strategic musings) to continuously improve our chances. The majority of our marketing money went to web-based marketing to get more eyeballs on our thought leadership. Margins were higher, and we built more inroads into potential clients than simply cold sales leads.

    Related: The How-To: Building An Exit Strategy For Your Business (Even Before You Start)

    Financial model

    The last and arguably most important portion of the sell sheet is the financial model. The model needs to showcase the key metrics that translate great ideas into profits. Before you lead with whatever is the best metric in your operating deck, gather some industry intelligence on the industry metrics that matter most right now. Don’t try and do this in a vacuum. Reach out to recent industry sellers to ask their single most important financial decision. Figure out what multiple businesses are selling at and what metrics drove their company’s actual selling price. If those metrics don’t show your business story in a good light, you may have to make real changes in investment spending, operating expenses or pricing model.

    Business #2 had very low overhead expenses as we spent less on office space and geographic expansion, and more on automation tools. It helped that this was during the pandemic, and our public company clients better understood the lack of a glitzy corporate headquarters. Expenses were lower, and excess cash flow was spent in a very surgical marketing campaign. We maximized our cash flow and margins, and as a result, more than doubled in two years the money that went into our pocket from a sale.

    It may be years before you sell your business, but the discipline of annually writing your own investment teaser can be an important factor in effective investment decision-making. Picture standing before seasoned investors, articulating how your business strategy and concentrated investments are delivering unrivaled growth opportunities. By prioritizing clear, compelling growth strategies and aligning investments directly with them, you position your business not just as a contender, but as an irresistible opportunity.

    Related: 6 Proven Ways to Sell Your Business for 10x or More

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    Beth (Saunders) Mazza

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  • Want to Leave Your Franchise Business Behind? 4 Exit Strategies to Consider | Entrepreneur

    Want to Leave Your Franchise Business Behind? 4 Exit Strategies to Consider | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When considering the exit of a franchise business, it can be easy to assume the reason for exiting is due to one of two possibilities: Either the business was so successful that someone made an offer to purchase it, or it was such a failure that the owner had to “get out.” As with most things, the real answer is often more complicated. There are plenty of other reasons someone might be looking to exit their business.

    In the excitement of starting a franchise business, an exit strategy is frequently overlooked, despite its importance in the planning process. This is understandable since we usually don’t like to think about the end of a journey before it’s begun. However, during my years as a franchise consultant and franchisee, I learned the importance of having an exit strategy in place. The best thing you can do? Plan ahead so you aren’t making critical future decisions under duress.

    Optimize your exit value by planning before a major change forces your hand. Common reasons people exit a franchise include:

    1. Getting a job offer they can’t refuse
    2. Deciding they are ready for retirement
    3. Experiencing a major life change (divorce, family change or illness)
    4. Receiving an unsolicited offer for a successful business
    5. Choosing to acquire or expand in another business
    6. Breaking up with a business partner
    7. Financial struggles in an existing business

    For this last reason, it’s important to remember that just because the business didn’t deliver the outcomes desired by the franchisee, it doesn’t mean there is no value. It’s common for business owners having trouble operating a business to sell it to a new owner who can step in and make it successful. After all, initial efforts by the original owner have likely shortened the launch ramp for a new buyer, including critical and time-intensive startup tasks such as securing a commercial lease, procuring equipment and inventory, recruiting and training employees and building a customer base.

    With all that in mind, here are four ways you can exit your franchise.

    Related: 6 Things to Consider When Getting Out of a Franchise Agreement

    1. Through the franchisor

    This option depends on the maturity of your franchise system. For example, say your franchise brand has been around for 40 years. In this scenario, they may have an entire team dedicated to resales, including special programs in place to work with lower-performing locations to encourage them to cycle out. Alternatively, say the system is a younger franchisor — in this case, the brand may not have a resale team in place, but they could still have relationships with brokers or consultants to assist you in a sale. The main point here? Don’t keep your franchisor in the dark — you and the franchisor have aligned interests (what’s good for you will likely be better for them in the long run).

    That said, keeping open communication with the franchisor does not mean they will solve the problem for you, but there will be more options available if you are transparent.

    2. Hire a business broker

    Selling a business will always take time, but if you need to move more quickly (sell in six to 12 months), the highest likelihood of success often lies in hiring a business broker in your area. The benefit of working with a broker is their industry knowledge and access to a large database of buyers in your local market. It’s their business to send out opportunities to their large network of potential buyers frequently.

    Business brokers are professionals at conducting transactions — so they can also connect you with other people who will help with the process (attorneys, due diligence, closing, escrow, etc). Keep in mind: Like a good real estate agent, they are likely looking for an exclusive listing. These agreements are often in place for 12-month terms, although terms are often negotiable. You may also be able to negotiate fee exclusions for specific buyers such as selling to another franchisee, etc.

    How much are the fees? The fees will be a percentage of the final sale — expect this to be as much as 10% or a minimum flat rate on smaller sale transactions.

    3. Go it alone and sell yourself

    At the end of the day, there is nothing that says you can’t try to sell your franchise independently. Maybe you have customers that love your business and would dream of owning it one day. Occasionally, even if you weren’t thinking about selling, someone may approach you and put in an offer. In this case, you can hire an attorney and forgo the broker process (win-win).

    While this may seem like an appealing option, there are a few things to consider. If you don’t have a readily available buyer, it takes a substantial amount of marketing to promote your business of sale. For example: Think about selling your house without an agent — not as many people will see it and you may have to pay a buyer’s agent regardless. The main challenge in selling independently is being able to find ready, willing and able buyers.

    Related: Before You Enter into Franchising, Consider Your Exit

    4. Contact a franchise consultant

    A lesser-known option may be to contact a franchise consultant who works with your franchise brand (choose a franchise consultant who is part of a national network in your market). While they probably don’t have as large of a local database as a business broker, they have a steady stream of buyers looking to start a franchise business. They may have current candidates or former candidates that align with your brand. And though they may not have as large a local database of a business broker, an experienced consultant residing in your market could have possible buyers for you — but expect that any fees required are paid by you, not the franchisor. A franchise consultant may not be a silver bullet, but it’s worth having a discussion.

    Ultimately, there is no one-size-fits-all process for setting up an exit strategy, but it’s important to do the research early so you’re not making any hasty decisions from a position of duress.

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    David Busker

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  • 5 Crucial Mistakes to Avoid for a Successful Business Sale | Entrepreneur

    5 Crucial Mistakes to Avoid for a Successful Business Sale | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    After the culmination of years, if not decades, of hard work and perseverance, the process of selling a business will bring many opportunities. But there will also be plenty of challenges, including emotional ones. In the excitement of a sale, many entrepreneurs make critical mistakes that can cost them dearly. Let’s explore five things you should never do when selling your business to help ensure you get the greatest possible deal and protect your interests.

    Related: 10 Mistakes I Made While Selling My First Startup (and How You Can Avoid Them)

    1. Neglecting proper valuation

    One of the biggest mistakes business owners make when selling their businesses is failing to conduct a thorough and accurate valuation. It’s essential to have a clear understanding of your business’s worth before entering into negotiations. Relying solely on intuition or an arbitrary number can lead to selling your business for less than its true value or overestimating its worth, scaring potential buyers away.

    To avoid this mistake, consider hiring a business appraiser or valuation professional. They can analyze your financial statements, assets, customer base and industry trends to determine the fair market value of your business. This valuation serves as a crucial reference point during negotiations and helps ensure you don’t settle for less than you deserve.

    2. Keeping poor financial records

    When selling your business, meticulous financial record-keeping is paramount. Buyers want transparency and reliability in financial data to make informed decisions. Unfortunately, some business owners neglect this aspect, which can lead to suspicion and doubt from potential buyers or even cause deals to fall through. Unfortunately, keeping accounting records on the back of a pizza box won’t instill confidence in the potential buyer.

    To avoid this pitfall, maintain accurate and up-to-date financial records. This includes organized income statements, balance sheets, tax returns and cash flow statements. Make sure your financial records are audited or reviewed by a reputable accounting firm to provide assurance to potential buyers. If your accountant has no experience in exit planning, it’s time to hire a new CPA to work alongside your current accountant. Transparent financial records can instill confidence in buyers and expedite the due diligence process. Keeping these records in a digital vault can speed up and create more confidence with the potential buyer.

    Related: You Sold Your Business. Now What? Embracing a New Chapter with Care and Purpose

    3. Ignoring due diligence

    Due diligence is a critical step in the business sale process, and it works both ways. While you’re evaluating potential buyers, they’re also assessing your business thoroughly. Failing to conduct due diligence on your potential buyer can lead to unpleasant surprises down the road.

    Don’t rush into a deal without conducting due diligence on your prospective buyers. Investigate their financial capabilities, track record and intentions for your business. Are they well-funded, experienced and committed to maintaining your business’s legacy? Engaging with a buyer who lacks the resources or intent to run your business successfully can lead to a disastrous outcome for you and your employees. In addition, many of the purchasers are professional buyers. So be careful not to take on these potential buyers alone! It’s important to get professional help.

    4. Keeping the sale confidential

    Maintaining confidentiality during the sale of your business is vital. Leaks or rumors about the sale can disrupt operations, create uncertainty among employees, suppliers and customers, and potentially harm the business’s value.

    To preserve confidentiality, limit the information shared with employees and only disclose details on a need-to-know basis. Similarly, communicate with potential buyers under non-disclosure agreements (NDAs) to protect sensitive information. Your investment banker or business broker can help you manage the confidentiality aspect of the sale.

    Related: The Secret to a Successful Sale — Expert Tips to Navigate Common Deal Derailers

    5. Neglecting a well-structured exit plan

    Selling your business isn’t just about the transaction itself; it’s about ensuring a smooth transition for all stakeholders involved. Neglecting a well-structured exit plan can lead to chaos, disputes and a loss of value.

    Before entering negotiations, have a clear exit plan in place. This plan should outline the timeline, responsibilities and expectations for all parties, including employees, suppliers and customers. Consider how you will handle the transition of ownership, the retention of key employees and the integration of the business into the buyer’s operations.

    Additionally, consult with legal and financial advisors to address tax implications, estate planning and asset protection strategies. Think about what you’re going to do after your exit, because neglecting this could be your biggest mistake. A well-thought-out exit plan not only safeguards your interests but also helps maintain the business’ stability during and after the sale.

    Selling your business can be a life-changing event, and it’s essential to navigate the process wisely. By avoiding these five common mistakes, you can increase your chances of a successful and lucrative business sale.

    Remember that seeking professional advice and guidance from professionals in the field, such as business appraisers, attorneys, Certified Exit Planning Advisors (CEPAs) and financial advisors, is crucial throughout the entire selling process. With careful planning and attention to detail, you can maximize the value of your business and ensure a smooth transition for all involved parties.

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    Mark Kravietz

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  • Every Entrepreneur Needs an Exit Strategy — Here’s Why | Entrepreneur

    Every Entrepreneur Needs an Exit Strategy — Here’s Why | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    If you’re an entrepreneur, you likely spend plenty of time thinking about how to grow your business, especially if it’s relatively new. There’s more to consider than just expansion, though. Every entrepreneur should have an exit strategy. You need a plan to ensure you can exit your company when you want to retire or explore other business ventures. Here’s why and how to go about it.

    You need business and financial goals

    Setting goals for your company is essential for long-term growth and success. A critical part of strategic planning for your business is creating an exit strategy. If you begin with the end in mind, it will be easier to determine the milestones you need to achieve to stay on track. Whether you want to grow your business for many decades or you’d like to attract buyers and exit as soon as possible, the key to getting what you want is planning well in advance.

    Related: When Should Business Owners Start Developing an Exit Plan? Here’s What You Need to Know.

    Your exit strategy should provide clarity

    An exit strategy also gives you the clarity you need for the next career phase. When you define your next steps and what it will take to accomplish them, you are more likely to succeed with your plans. Additionally, you’ll have the peace of mind needed to take action rather than stalling because you aren’t sure how to get started.

    Know who and when

    It may not be possible for you to set a definite date for exiting your business when you first create your strategy, and you don’t know the name of the buyer or the person taking over for you. But you can begin with an approximate timeline for when you’d like to transfer control and a profile of the ideal buyer. As time progresses, you can make more accurate decisions regarding the timeline.

    Related: Exit Strategy Through the Eyes of an Angel Investor

    Keep income statements and balance sheets updated

    Knowing what your business is worth is crucial to creating a solid exit strategy. Your income statements tell you a lot about the health of your business, and they’re going to tell the potential new owner a lot, too. It’s important to keep them updated and ready to go at all times. Not only does that help you better understand when the appropriate time is to exit the business, but it also gives you leverage when you negotiate with potential buyers or successors.

    In addition to your income statements, you’ll also want a potential buyer to see the balance sheet. That shows them what kind of money is coming in and going out, all in one place.

    Even though there’s a lot more to operating a business than money, cash flow is what matters when it comes down to it. Your exit strategy should include paying close attention to that cash flow to move on at the most reasonable time for your needs. There’s no reason to settle for less than you wanted to get for your company because you mistimed your exit.

    Growth potential can entice buyers

    Even if you are eager to exit your company, it’s important to time your departure in relation to its growth potential. Leaving prematurely could hinder your company’s growth. Depending on who is buying your company, they may want to buy your company on the condition that you are able to stick around for a few years before you leave for good. The opportunity for additional, even explosive, growth could encourage a substantial buyout in your favor.

    Related: 4 Go-To Moves to Help Start Your Exit Strategy Now

    Cash flow is key to it all

    Understand your cash flow and move when the time is suitable for the best chance at protecting yourself and your future. The buyer of the company will want to see strong cash flow to the business, and you’ll want to exit the company while it’s still strong and healthy to get the most significant benefit.

    The bottom line on exit strategy

    The most important concept to focus on when considering an exit strategy is what you want and need from it. Yes, you want to exit the business at a time that encourages someone else to buy or take over, but your needs are also important. With careful planning, you can find a great balance between your plans and goals for the future and exiting your business at a time when its value appeals to others.

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    Brady Frank

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  • Succession Planning Is Vital — Here’s What You Need to Do. | Entrepreneur

    Succession Planning Is Vital — Here’s What You Need to Do. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Business owners know a thing or two about working long hours. Without fail, there’s always something to do. But what about putting in the time to develop proper business succession planning? A recent report from SIGMA shows that nearly 1 in 10 leaders believe succession planning is not worth the time and money that it costs. Are you that one? There will be a time when you’ll want to transition ownership of the business to another party, and it may be sooner than you think.

    While seemingly straightforward, succession planning for business owners can take several different forms, each with its own set of pros and cons. You’ll want to understand your options and how they relate to what you hope to accomplish. No matter when or how you transition ownership, your results will be impacted by how much effort you put into planning.

    Related: Succession Planning: It’s Never Too Early to Start Thinking About the Future of Your Business

    Starting with the end in mind

    An important trait in highly effective people is the ability to come into any given situation with a clear understanding of the destination. It allows for better identification of the necessary steps to achieve a desired outcome. That’s business succession planning in a nutshell — or, at least, that’s the goal.

    If you think success planning is as simple as handing over the reins to family, you’d be mistaken. Only about half of heirs want to take ownership of the family business. That’s a stark difference from what business owners actually think, with 67% believing that their heirs want the business. Even if the family member is ready to take over, succession planning for business owners takes time and preparation. Below are five strategies that will help you start planning for succession and the thought that needs to go into it.

    1. Carving out the time necessary

    In our experience, it’s best to start creating a succession planning roadmap at least three to five years prior to the date of the planned transition. Without a roadmap, you might unknowingly create hurdles to a successful transition instead of facilitating a clear path to new ownership. In fact, it could even put into question the financial security you desire.

    Let’s say you’ll be selling the business to an unrelated third party. The financial impact will be significantly different than “gifting” the business during your lifetime or transitioning ownership upon your death by way of an estate plan. You must determine the value needed from the sale to maintain your lifestyle once you no longer own the business — and that’s just the start.

    Related: Most Family Businesses Don’t Have a Succession Plan in Place, But That’s a Huge Mistake

    2. Making sense of a sale prior to the sale

    Selling to an unrelated third party can present several challenges. Identifying potential buyers that are qualified to purchase the business isn’t always easy nor is taking all the appropriate steps to prepare the business for a sale. A great deal of information will be required as part of the buyer’s due diligence process. How long will the process take from start to finish?

    Then, there’s the question of whether to engage a business broker or investment banker to assist in the sale. How will they evaluate potential offers? What potential issues might come up in the purchase agreement? Are there any confidentiality concerns? Is the sales process being done in the most tax-efficient manner? Have you considered what you’ll do after the sale?

    3. Balancing business continuity and succession planning

    We recently worked with an owner who had several separate yet related businesses. They only wanted to sell one of them. The process started with a full valuation and then the determination of whether selling one business would be detrimental to the value of the combined businesses. They also wanted to explore whether they could sell the business to a group of employees and how that might compare to an outright sale.

    We conducted an assessment to identify the business owner’s goals in the ownership transition. Then, we helped them prioritize those goals. After talking with several interested buyers, including the employees, the owner decided to move forward with a large buyer who expressed interest in acquiring the business and real estate.

    4. Arriving at a smart fiscal decision

    The owner’s choice of buyer came down to the fact that it would enable them to achieve the majority of their highest-priority goals. Because of advanced planning, the owner knew what their business was worth, the minimum value they’d need to receive from the sale and the potential issues the buyer would likely raise.

    Ultimately, the buyer did make an offer that was lower than the valuation, but we were able to negotiate a more acceptable offer that provided for full payment at closing. This provided the certainty that the owner sought, and the transaction was closed within a reasonable amount of time. All parties were pleased with the outcome.

    First Business Bank recommends you employ a team of professionals to help you come up with a proper valuation for your business — including “your CPA and business appraiser. You might also include your attorney, wealth management professional, business banker and possibly an investment banker/business broker in the discussion to ensure coordination.”

    5. Putting the pieces together

    Creating a succession plan for your business always starts with defining the goals you’d like to accomplish as part of the ownership transition. It’s for this reason, among many others, that we recommend getting the ball rolling as early as possible. Once you’ve defined your goals, you can focus on arriving at a fair market value for your business today.

    With that in mind, how much value would you need to realize to be financially independent after the transition? Will the sale allow you to live your desired lifestyle? If there’s a gap between the fair market value and what you need to achieve your future income needs, then develop a plan to increase the value of your business within the timeframe you’d like for the transition.

    Related: 4 Lessons on Succession Planning for Entrepreneurs

    Getting what it’s worth

    We firmly believe that the more time and effort you spend on business succession planning can exponentially improve the probability of a satisfactory outcome. The more you prepare and understand what to expect, the smoother the process will go for both you and the buyer. It also doesn’t hurt to have an advisor on hand who can properly assist you through the process.

    Ultimately, preparation is key to successful succession planning for business owners. It will save you time and could even help in building trust with the buyer, which can minimize conflict as the process moves forward. When the buyer has confidence in the information they’re receiving and your integrity, it provides you with more leverage in negotiating the final price and terms.

    In the end, a succession planning roadmap increases the chances that you’ll get what the business is worth and be able to maintain your lifestyle for years to come. It’s all in your approach.

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    Larry Guess

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  • 4 Companies Followed This Secret Formula. Now They’re Valued at $50 Million or More. | Entrepreneur

    4 Companies Followed This Secret Formula. Now They’re Valued at $50 Million or More. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    My 20 years in the Entrepreneurs’ Organization have provided me with a front-row seat to significant business creation and operational strategy. Of the hundreds of entrepreneurs I know, four Portland, Oregon-based leaders hit home runs and exited at company valuations of $50 million or more: the founders of Ruby Receptionists, Survey Monkey, Jive Software and DW Fritz Automation.

    Because I knew those companies very well, I wondered whether they all took similar actions to create that level of success. What did they have in common? Is there a formula other founders could follow to hit similar financial home runs?

    The answer is a resounding “yes.” The four founders who sold their companies for more than $50 million each did these four things:

    1. Created significant value for customers in a distinct way within their niche.
    2. Developed super-clear branding around their unique product.
    3. Created extremely robust company cultures.
    4. Timed their exits precisely to maximize company value.

    Each company created significant “enterprise value” — value inherent in the way it did business and its future earning potential. Aside from hard assets like cash or real estate, millions of dollars of value existed in their business models and operational expertise. As a result, serious buyers recognized that fact and paid generously for it. That is a rare distinction among small businesses.

    So how do you create a business with such obvious enterprise value that big buyers will pay millions for it?

    Replicate the following four “million-dollar ideas.” If you are able to implement even one successfully, by itself, it will create over $1 million in sales value for your company.

    Related: Are You Sitting on Top of a Million-Dollar Idea?

    1. Deliver a ton of value customers can’t readily get elsewhere

    I saw billionaire, James Williamson, interviewed on his private jet on YouTube. When asked how he became that rich, he didn’t hesitate: “Find a niche. Crush it. Deliver more value than anyone else.”

    All four companies identified a unique product or service that customers both needed and valued. Or, they delivered a more standard product with a tweak or in a way not readily available elsewhere.

    Here’s the key: Whatever your differentiators, your offering must be unique in three ways or more. Not just one or two — at least three.

    If your primary product is not totally distinct and unattainable elsewhere — like a restaurant or electrical contractor — you can develop your three uniques. Maybe it’s a better product, lower price, different delivery method, more intuitive interface, unusual spin, friendlier service or a more personalized, memorable brand. It must be essentially better than everything else and also distinct in (at least) three ways.

    Each of the four company product offerings was truly differentiated, and the company knew in what way — and pushed harder for further differentiation all day, every day.

    2. Develop crystal clear branding around your specific differentiation

    These companies knew what they were offering. They saw customers piling up and recognized why. Their marketing was clear about what they offered that others did not.

    Maybe more importantly, they knew what they were not — and each was most definitely not everything to everyone. Only certain customers were right for them, so they focused on those and forgot the rest, even if the rest was a considerable number. That is to say, they served a specific market segment and did it better than anyone else but left the rest of the market to others.

    Related: Beyond Logos and Colors — How to Create a Compelling Brand Identity

    3. Create a super strong culture focused on customer success

    These companies created cultures you could feel when you walked into their offices, like a personality unto itself. You knew it was something special and different. The people were happy, motivated and focused on driving the company forward.

    Each company’s core values were extremely focused. In all cases, half of the values concerned the customer and what the company was doing to benefit that customer. Things like “practice wowism” or “find a better way,” not just generic values like “trust.”

    Each team member was hired because they matched those values. All were clear on what the company was, where it was going and how they could help it get there. They personified the strategy of rowing in the same direction. In a fundamental sense, they were a “cult” focused on creating unique value for customers and success for each other and the company. Their energy level approached frenetic.

    4. Time your exit precisely to maximize sale value

    My observation on business exits: Timing makes all the difference. A company that can barely sell on contract for $1 million at one point in the cycle could garner $10 million all cash at another. At times, specific business types are hot and highly sought after; at other times, they’re not. There can also be a long time between peaks in the cycle. Because of that, timing the cycle — and, therefore, demand — is probably more important than your personal timing and plan. The two seldom line up perfectly. These four owners struck while the iron was hot.

    In all four cases, the companies sold to an entity that wanted to take the business to a higher level. One interesting note: Because of that, both historic actual profitability and cash flow were basically irrelevant. What the buyer thought they could do with the company in the future mattered most. They sold on what is known as “pro forma” value.

    Angel investors, private equity or venture capital groups bought three of the four companies. In all cases, when one group showed interest in buying them, the company solicited other groups (often through a broker). That generally increased the first buyer’s interest and ultimately enabled the entrepreneur to exit at a 30% to 100% higher price than if they had worked solely with the first buyer. The buyers then took the companies to new heights, either by going public or selling to a larger strategic buyer. One of the four companies sold directly to a larger strategic buyer.

    Even in their exits, the four shared significant commonalities.

    Related: When Should Business Owners Start Developing an Exit Plan? Here’s What You Need to Know.

    Devise the perfect setup to catch lightning in a bottle

    When I connected the dots between these four companies, it almost felt like being struck by lightning. I could not believe how common their trajectory was and, more importantly, how they got there. These four caught lightning in a bottle — and while some luck is always necessary, you can’t deny that their playbooks were quite similar and well-executed.

    If your company can implement any (or all) of these ideas to their fullest potential, you will create millions of dollars in enterprise value.

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    Barry Raber

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  • 7 Ways to Embrace the Change After Selling Your Business | Entrepreneur

    7 Ways to Embrace the Change After Selling Your Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Embarking on the journey of selling a business can be an emotional rollercoaster. Whether you spent years nurturing it or it was a recent endeavor, letting go of something you built from the ground up can evoke a mix of excitement, uncertainty and even a sense of loss. Adding retirement into the mix is a whole other layer of complexity. In fact, one-third of retirees in the United States develop symptoms of depression at this stage of life, which is why preparing for your next phase of life is critical.

    As one chapter ends, another begins, filled with endless possibilities and opportunities for personal and professional growth. Let’s explore the steps you can take to navigate this transition with care and embark on a new path brimming with purpose and fulfillment.

    Related: How Much Time Do I Need to Sell My Business? First, Consider These 7 Factors.

    1. Celebrate and reflect

    First and foremost, take a moment to celebrate your achievement. Selling a business is a remarkable accomplishment, and it’s essential to acknowledge the hard work, perseverance and dedication that went into building it. Reflect on the valuable lessons learned, the challenges you overcame and the impact you made on your employees, customers and community. Give yourself permission to feel a sense of pride and gratitude for your journey.

    2. Embrace change and adaptation

    While the sale of your business marks the end of an era, it also presents an opportunity to embrace change and adapt to new circumstances. Recognize that transitions can be challenging, and it’s natural to experience a range of emotions. Allow yourself the space and time to adjust to this new phase of life, knowing that change often brings growth and personal development. Stay open-minded and be willing to explore new avenues and possibilities.

    3. Reconnect with your passions

    Now that you have freed yourself from the demands of running a business, take the chance to reconnect with your passions and interests that may have taken a backseat during your entrepreneurial journey. One client of mine likes to build furniture and another is into music. Whatever you’re passionate about, rekindling those aspects of your life can bring immense joy and fulfillment. Allow yourself the freedom to explore and rediscover what truly brings you happiness.

    Related: 6 Questions to Ask Yourself Before Selling Your Business

    4. Seek support and mentorship

    Transitioning from being a business owner to a new phase of life can be daunting but remember that you don’t have to navigate this journey alone. Reach out to friends, family and mentors who can provide emotional support and guidance during this transition. Share your thoughts, concerns and aspirations with them. Their insights and experiences may help you gain new perspectives and uncover opportunities you hadn’t considered before. I’ve had clients that needed professional help to get over the loss of not running a business.

    5. Set new goals and challenges

    Humans thrive when they have goals and challenges to strive for. With the sale of your business, it’s time to set new objectives and embark on fresh endeavors. Reflect on your personal and professional aspirations and craft a vision for the future that excites you. Perhaps you wish to explore a different industry, start a new venture or dedicate yourself to a cause close to your heart. By setting clear goals, you can channel your energy and passion into pursuits that align with your values and aspirations.

    6. Learn and grow

    Entrepreneurship is a continual learning experience, and selling your business doesn’t mark the end of that journey. Embrace opportunities to expand your knowledge and skills. Attend workshops, conferences or online courses that cater to your interests. Engage in networking events or join industry-related communities where you can share your expertise and gain new insights. Investing in your personal and professional growth will keep you intellectually stimulated and open doors to new possibilities.

    Related: Cashing Out: What Every Entrepreneur Should Know Before Selling a Business

    7. Find a higher purpose

    Beyond personal and professional growth, consider how you can contribute to a greater cause or positively impact society. Whether it’s through volunteering, supporting charitable organizations or advocating for a particular issue, finding a higher purpose can bring deep fulfillment and meaning to your life. Explore avenues where you can utilize your skills, expertise and resources to create a lasting and positive change in the world around you.

    Selling your business is a significant milestone, signifying the end of one chapter and the beginning of another. As you embark on this new journey, approach it with care, compassion and a sense of purpose. Celebrate your achievements, embrace change and reconnect with your passions. Seek support from your loved ones and mentors and set new goals and challenges that align with your values and aspirations. Remember to prioritize personal growth and find ways to contribute to a higher purpose. With this caring mindset, you can embrace the opportunities that lie ahead and create a fulfilling and meaningful life beyond entrepreneurship.

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    Mark Kravietz

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  • How to Harness Workplace Culture to Ensure a Profitable Exit | Entrepreneur

    How to Harness Workplace Culture to Ensure a Profitable Exit | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Many founders looking to sell their businesses consider offers from private equity firms, which typically buy out most of an owner’s stake while giving them a piece of the restructured organization, incentivizing them to fully participate in its transition and scale. These founders are in a unique position to help maximize the future value of their companies by supporting a critical aspect of their evolutions that most private equity firms don’t sufficiently prioritize.

    Private equity firms are highly focused on the financial and operational aspects of businesses’ potential, yet only a select few dedicate real, expert attention to the cultures of newly acquired portfolio companies. This can add risk to the strategies designed to grow organizations, as workplace cultures can serve to drive or impede companies’ success, depending on their nuances, and will take form regardless of what actions leaders take. They either develop organically without intention or alignment to strategy or are purposely shaped for organizations’ ultimate benefit.

    This offers founders the opportunity to step into the role of culture advocate and champion, helping retain core aspects of their original cultures while sunsetting those that need to evolve. Founders who truly engage fully and openly in this process can help shape a culture 2.0 that honors the history and legacy of their organizations, maintaining the best of what they built, while serving strategic needs as the businesses grow.

    Related: What to Expect When Selling Your Business to a Private Equity Group

    A unique and singular role in cultural transitions

    Founders across industries — from healthcare services to tech — are known for pouring their hearts and souls into their businesses, all but ensuring the cultures that develop are intertwined with their values, workstyles and preferences. As such, they can have an incredibly strong influence on the design of a refreshed culture that encourages the ideal combination of behaviors that will drive future value creation — from how decisions are made to openness toward new ways of working to how leaders share information.

    Of course, founders can also struggle with the idea that the companies they built tirelessly will undergo cultural changes — reflecting the years and often decades they’ve invested in creating positive and productive workplaces. Feelings of defensiveness and distrust are incredibly common, especially for those in service-minded, mission-driven sectors, like healthcare, who rely on a professional vocabulary distant and apart from the world of private equity.

    Founders should seek to identify these feelings and recognize what’s driving them, ultimately getting to a place of understanding that the culture that got them “here” won’t take them “there.” Getting “there” will necessitate an intentionally designed culture 2.0. Their participation in the development of such cultures, and openness to new leadership adding their fingerprints to what they’ve created, will best ensure that organizations maintain their “secret sauce” while embarking on their next chapters.

    Related: 3 Steps to Selling Your Business Without Sacrificing Its Soul

    Refreshing culture alongside private equity partners

    A growing number of top-performing private equity firms are achieving success by supporting the development of strong, healthy workplaces, especially in mission-driven organizations. Increasingly, the savviest of these investors recognize the value of cultural evolution within their portfolio as a driver of growth, although most will admit it’s not their particular area of expertise.

    This leaves an opening for founders to advocate for the intentional development of refreshed cultures that accelerate organizations’ journeys to growth and greater profitability while keeping their missions intact. Those who choose to be proactive in this area will overwhelmingly find willing and collaborative partners, as most private equity firms understand the importance of including founders in future-looking conversations. If anything, private equity firms are now so aware of the dangers of imposing their own top-down ethos that they often downplay the risk of inaction with regard to culture.

    Of course, founders can only advance these efforts to a point, as their enduring success and bottom-line impacts require more than just an individual proponent. They’ll need buy-in at the board level to greenlight the in-depth, expert work required to maximize results, including analyzing and mapping out the existing and desired future culture, designing and implementing work streams that facilitate a transition from one culture to another and “pulling” new cultural elements through every facet of the company until they become wholly engrained.

    Related: How to Retain Your Company Culture After Getting Acquired (And Why That’s So Important)

    Pre-close due diligence can further harness value

    The savviest founders are taking an even more proactive and novel approach toward maximizing their workplace cultures. Before putting their businesses up for sale, they’re utilizing third-party experts to independently assess and quantify the value of the people-centric elements of their businesses, including both the cultural strengths they’ve cultivated and also their existing leadership. Not only do these investments significantly reduce the efforts required to intentionally transition cultures after a transaction, but they also increase the value of the companies and boost what buyers are willing to pay for them, shedding light on what has traditionally been an unknown.

    These methods and tools are new but catching on, especially as more and more private equity firms, and founders alike, recognize how culture can serve as a barrier or a springboard toward a smooth and profitable exit.

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    David Eaton

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  • 6 Common Pitfalls Small Business Owners Must Avoid When Selling Their Business | Entrepreneur

    6 Common Pitfalls Small Business Owners Must Avoid When Selling Their Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Selling a business is a monumental decision for any entrepreneur. After years of toiling to build your venture, it’s essential to ensure that you receive the best possible return on your investment.

    However, in the rush to close a deal, many entrepreneurs fall into traps that can jeopardize the sale or significantly reduce the value of their business. I’ve compiled a list of several common pitfalls that entrepreneurs must sidestep to ensure a successful sale.

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    Chad D. Cummings

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  • 3 Critical Strategies to Help Your Company Sell | Entrepreneur

    3 Critical Strategies to Help Your Company Sell | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When you’re getting a new business off the ground, selling it is likely the last thing you’re thinking about.

    However, the truth is that it’s much easier (and much less costly) to develop your exit plan from the start than it is to restructure your company to sell. For business owners, the best course of action is to grow a sellable company right from the beginning.

    Not sure how to develop a sellable business? Here are some tips to get you started.

    Related: 3 Reasons You Should Sell Your Business

    How do you improve sellability while building a business?

    Making your business sellable doesn’t only benefit you when it comes time to make a sale. The businesses that command the highest sale prices are also the most profitable, so when you’re building a sellable business, you’re also setting yourself up for success as a business owner.

    One of the keys to building a sellable business is making early investments to improve scalability over time. You can do that by focusing on the following:

    • Implementing high-quality, efficient technology systems
    • Hiring executive leaders
    • Having financials regularly reviewed and audited
    • Building human capital function

    These might sound like obvious investments to make to some. Still, many founders do not want to make the necessary investments in infrastructure to be able to scale the business, instead viewing it as ‘overhead.’

    Investing in infrastructure from the outset may involve a substantial cash outlay, but it will dramatically increase your business’s value when it comes time to sell. Align Business Advisory, a leading M&A advisory for small and mid-size businesses, also points out that a third-party advisor can greatly help businesses to figure out ways to improve their overall scalability with services like business valuation and exit planning.

    If your company has quality infrastructure that can be built upon, potential buyers are looking at a turnkey sale. You’ll be poised to make significantly more from the sale in this situation. If a buyer sees that they will need to restructure the company for scalability after they purchase it, they’ll pay much less.

    Related: Top 5 Mistakes Entrepreneurs Make When Scaling Their Business To 7 Figures

    How do you help your company sell for a higher multiple?

    Even if your company has already been in business for years, there are still several things you can look at to optimize total value. If you want to make sure you’ll make as much as you can from the sale of your company, start with these steps.

    1. Enhance operational efficiency

    Many smaller business owners are owner-operators; their presence is essential for business success. However, when it comes to making a sale, this situation can dramatically decrease what a buyer is willing to pay.

    Why? If the buyer purchases a business like this, they’re taking on considerable risk. Once you leave the business, there’s a possibility that daily operations will suffer or key customers will leave.

    If you can demonstrate that your business functions well without your involvement, buyers will see a purchase as much less risky, so they’ll likely pay more when the time comes to sell.

    Related: Selling Your Business? Do These 6 Things Right Now.

    2. Optimize gross margin and EBITDA

    Not all revenue dollars are created equal. For instance, If a company must spend $99 to make $100, then that $1 of profit is not as valuable. So, regarding profitability, the cash in your business’s bank account isn’t the only thing that matters.

    To ensure your profit margins are high enough to draw in quality buyers, you’ll want to look at your EBITDA (Earnings Before Interest Taxes Depreciation Amortization) margin profile.

    Your EBITDA margin indicates your operating profit as a percentage of your total revenue. In most cases, buyers want an EBITDA margin of at least 10%. Many buyers view businesses with lower margins as too risky.

    3. Diversify your customer base

    Having one or two customers who routinely spend large amounts at your business can give you a sense of security. But buyers want to see diversified revenue. If most of your revenue comes from a few customers and those customers stop patronizing your company, your finances will suffer.

    In most cases, buyers look askance at any business where a single customer accounts for over 20% of the revenue. They may still purchase your business but are likely to pay substantially less.

    If you currently rely primarily on a few customers for steady income, make an effort to diversify income sources. That could mean offering additional products or services or using targeted advertising to draw in different demographics.

    Related: The 11 Rules of Highly Profitable Companies

    Build a sellable company from the ground up

    Creating a business that’s built to sell can be a challenge, especially if you’re wrapped up in running that business from day to day. However, it is vital that entrepreneurs prioritize sellability from the start of their business journey.

    The tips above provide ways to help maximize your business’s total value and attract quality buyers. By proactively working toward sellability, you are not only positioning yourself for a successful sale, but also setting yourself up for long-term business success and profitability.

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    Peter Daisyme

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  • 8 Lessons Learned From Building and Selling a Startup | Entrepreneur

    8 Lessons Learned From Building and Selling a Startup | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In entrepreneurship, success often lies in challenging the status quo and embracing risks that others shy away from. It begins with a spark — a bold idea that sets the foundation for a groundbreaking startup. Think about Steve Jobs and his audacious vision of bringing a computer to every individual’s home or Elon Musk’s relentless pursuit of revolutionizing space travel. These pioneers disrupted industries and left an indelible mark on the world.

    As an entrepreneur, your journey from idea to successful exit will require audacity, resilience and an unwavering commitment to your vision.

    Related: The Most Valuable Lessons These 5 Top Entrepreneurs Have Learned

    1. The crucial role of market research: Don’t shoot in the dark

    Before diving headfirst into execution, an astute entrepreneur knows the importance of thorough market research. To navigate the competitive landscape successfully, you must identify your target audience, their pain points and existing solutions. Embrace the opportunity to immerse yourself, and gain direct knowledge by actively engaging in surveys, interviews or focus groups.

    Keep in mind that unraveling your customers’ needs and aspirations holds the key to creating a product or service that profoundly connects with them. Don’t shy away from diving in and seeking firsthand insights — it’s the secret ingredient for success.

    2. Assembling a stellar team: Birds of a feather fly together

    Your startup’s journey is not a solo expedition; it’s a team sport. Put yourself in the company of talented people who share your passion, complement your strengths and challenge your thinking. Look beyond their qualifications; focus on their cultural fit and shared values. As stated by Sir Richard Branson, “Provide people with sufficient training to enable them to leave, but treat them so well that they have no desire to.”

    Foster a nurturing and cooperative work atmosphere that cultivates creativity, and you will experience the enchantment of a cohesive team propelling your startup to unprecedented achievements.

    3. Embrace failure: A launchpad for growth

    Failure is not a setback; it’s an opportunity for growth. Every successful entrepreneur has experienced setbacks and failures along their journey. Take the story of James Dyson, the inventor of the bagless vacuum cleaner. He endured 5,126 failed prototypes before achieving success. Embrace failure as a stepping stone towards success, learn from it, adapt, and pivot when necessary. Remember, resilience is a trait that separates the ordinary from the extraordinary.

    4. Scaling smartly: Don’t outgrow your britches

    As your startup gains traction, scaling becomes the next critical phase. However, beware of scaling too quickly without a solid foundation. The temptation of rapid growth can be overpowering, yet finding a delicate equilibrium is crucial. Let us reflect upon the cautionary story of Webvan. This swiftly expanding grocery delivery startup ultimately crumbled under unsustainable scaling. Prioritize scalability by investing in infrastructure, streamlining processes and building a strong organizational culture that can withstand growth.

    Related: 21 Lessons I Swear By After 21 Years as an Entrepreneur

    5. The art of the pivot: Adapting to the winds of change

    Adaptability reigns supreme in the dynamic realm of startups. Embrace feedback wholeheartedly, heed your customers’ voices attentively, and remain acutely aware of prevailing market trends. A successful entrepreneur understands the value of agility and is not afraid to pivot when necessary. Slack, originally a gaming company, underwent a complete transformation into the widely used workplace communication platform we know today. Stay nimble, and be willing to embrace change — it might just be the secret ingredient that propels your startup to unforeseen heights.

    6. The power of networking: Opening doors and seizing opportunities

    Throughout your entrepreneurial journey, the power of networking cannot be underestimated. Building meaningful connections with industry experts, mentors and potential investors can open doors to invaluable opportunities. Attend conferences, join entrepreneurial communities, and leverage social media platforms to establish your brand. Cultivate relationships that go beyond mere transactions, as these connections can become your biggest advocates and sources of support.

    7. The exit strategy: Knowing when to fold ’em

    Finally, the pinnacle of an entrepreneur’s journey — the exit. While the dream is to build a successful and sustainable business over the long term, there may come a point where an exit becomes the most strategic move. Knowing when to fold ’em requires astute judgment and a clear understanding of your business’s potential, whether through an acquisition, merger or going public.

    Deciding to sell a startup should not be taken lightly. It requires meticulous thought regarding numerous aspects, such as market conditions, growth opportunities and personal objectives. Evaluating potential buyers or partners and their compatibility with your vision and the value they can contribute is crucial. Refuse to accept anything less than the deserving outcome for all the effort you have invested.

    8. The art of negotiation: Securing a deal that reflects your worth

    When selling your startup, mastering the art of negotiation becomes paramount. Your dedication and hard work in building your business deserve a deal that accurately represents its true value. Equip yourself with a comprehensive grasp of your business’s financials, projections and distinctive selling propositions for intensive negotiations. Enlist the support of seasoned legal and financial advisors who can navigate the complex journey, ensuring you secure a deal that optimizes your return on investment.

    Related: 18 Inspiring Lessons From the GOATS of Entrepreneurship and Leadership

    Post-exit reflection: Learning from success and failure alike

    Once the chaos settles and the contract is finalized for the acquisition, pause to contemplate your entrepreneurial voyage. Commemorate your triumphs, recognize your setbacks, and extract valuable lessons from them. Chronicle your experiences, encompassing both favorable and unfavorable ones, and impart them to aspiring entrepreneurs who can gain from your wisdom. Remember that your departure marks not the conclusion but the commencement of a fresh chapter.

    Employ your newfound resources, connections and knowledge to embark on new entrepreneurial ventures, guide the upcoming innovators, or invest in promising startups. Pay it forward, and contribute to the entrepreneurial ecosystem that has nurtured your growth.

    The path of an entrepreneur is extraordinary, requiring tenacity, resilience and a strong belief in one’s vision. Embrace risks, learn from failures, and pivot when needed. Build an exceptional team, and cultivate relationships that propel you forward. Seize exit opportunities on your terms. These insights offer guidance in the tumultuous world of entrepreneurship. Embrace your unique spirit, dare to dream, disrupt, and leave a mark. Fearlessly chase your dreams, and build a startup that defies expectations. The future belongs to those who turn ideas into reality and walk the path less traveled.

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    Chris Kille

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  • 6 Questions to Ask Yourself Before Selling Your Business | Entrepreneur

    6 Questions to Ask Yourself Before Selling Your Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Owning a business is a big decision and choosing to sell it can be just as significant.

    Selling your business comes with many considerations, including the value of it and any financial prospects, what a potential buyer is looking for, if you’re actually done with your business and what you’ll do after it’s sold. If you’re considering selling your business, ask yourself these six questions to assess your options and identify the next best step.

    Related: Selling Your Business? Do These 6 Things Right Now.

    1. Am I ready to sell?

    Start by outlining your reasons for selling. What’s driving your decision to sell? Maybe you’re burned out post-pandemic and you need to get a fresh perspective. Maybe you feel stuck, like a hamster on a wheel who can’t find its way out. In these cases, selling may not be the answer. Consider your goals for the sale and what a positive outcome would look like. It can be helpful to write down your thoughts or list the pros and cons.

    Once you answer these questions, seek an opinion from someone you trust. Selling your business is not just a financial consideration, but it’s also an emotional one. Take time to get to the bottom of what’s fueling your feelings and then get into how it’s done (if you still want to sell).

    2. What is the value of my company?

    As a business owner, you should have an excellent (and realistic) understanding of what your business can get in the open market. My experience with many business owners has been that they value their business at least 50% higher than the actual value. It’s essential to get a third party to evaluate your business.

    You can look into programs that provide a back-of-the-envelope calculation or you can go to a professional business valuator. A back-of-the-envelope estimate typically focuses on the return on investment (ROI), a quick, practical way of reaching a selling price. Although it is universally utilized, an ROI calculation overlooks factors such as time, capital appreciation, risk, potential and inflation, among other factors.

    Utilizing a professional business valuator will provide a more accurate number, which can result from different approaches and considerations (including assets, market comparison, income, etc.). The challenge with this route is finding the right valuator for your business and industry who will charge a fair appraisal price.

    Related: 6 Proven Ways to Sell Your Business for 10x or More

    3. Is knowing the value enough?

    Understanding the value of your business includes more than just how much you should sell it for. To prepare for business transfer ownership, you should organize your finances, including your tax filings, licenses, deeds and profit and loss statements.

    It would be best if you also took inventory of your tangible and intangible assets and any liabilities. Taking the time to outline your business plan and model will benefit you and potential buyers, so they understand the full context of the company and how it generates revenue.

    4. Who will I sell to?

    It’s likely that you will have many alternatives to choose from. For example, you can sell your company to your employees through an Employee Stock Ownership Plan (ESOP), which has many advantages but some hoops to jump through; or maybe you have family members that are capable and want to take on the responsibility of running the company. If you are looking outside your circle, consider an individual investor, private equity firm or strategic buyers.

    5. What professionals will I need?

    It takes a village to sell a company. There are many components and complexities to each deal. The team of professionals you’ll need will depend on the specifics of your business, such as the industry, size and nature. Here are some professional’s business owners will want to have on their exit planning team:

    • A Certified Public Accountant. Look for one experienced in dealmaking to help ensure the sale and transfer are done correctly. There are several tax-related aspects to selling a business and you want to help ensure you’re up on the latest regulations and opportunities for saving money.
    • A Certified Exit Planning Advisor (CEPA). They can help ensure you’re getting the maximum benefits when you sell, and they’ll consider your personal and financial objectives.
    • A Certified Financial Planner (CFP). They can help with the financial aspects of the deal, including what your financial future looks like.
    • A business attorney. They will create legal plans to carry out the sale and look to keep you out of trouble.
    • An estate attorney. There are very big advantages that you can take advantage of in your pre-liquidity planning.
    • A business valuation expert. They can give a more accurate idea of what your company is valued at. That’s if you don’t want a back of the envelope number.
    • M&A advisors. They will look for strategic or financial buyers of your business. They will generally help mid-market and above companies.
    • A business broker. They will contact potential buyers and can screen interested parties for financial ability or other qualifications. They generally help the lower middle market.
    • An insurance professional. They can review your insurance and make alignments based on your needs.

    Some professionals may assist in overlapping areas, but it’s best to use a team approach to help ensure you’ve got the necessary support. Working with the right people will help achieve a successful outcome and a seamless transition.

    Related: Know When and How to Sell Your Business

    6. What will I do after I sell?

    Preparing and understanding what you want to do post-sale is essential for your mental well-being, primarily since most small business owners I know (myself included) are defined by their business.

    They are only looking at their business, growing it and looking to sell the company for the best offer. I ask them what they will do with all the extra time they will have. I get surprising answers such as “I haven’t thought about that,” and “I guess I’ll spend time with my grandkids.” While it’s great to spend time with family, they have their lives and soon you will be looking for other things to do.

    Asking yourself these six questions will likely raise additional questions. Taking time to consider your answer to each question is an excellent opportunity to explore the next steps — whether that’s selling your business or not. Answering these questions honestly and engaging the right professionals at the right time will help ensure that you get the most value for your life’s work.

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    Mark Kravietz

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  • 3 Platforms To Elevate Your Virtual Tour Strategy | Entrepreneur

    3 Platforms To Elevate Your Virtual Tour Strategy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    As the founder of one of the country’s fastest-growing 3D Virtual Tour companies, I’ve dedicated a lot of time to testing all of the leading virtual tour platforms available. There are hundreds of these 3D software on the market, though only a few can produce the quality content needed for my clients.

    There are many factors to consider when choosing a virtual tour software for your business, including the price, usability and quality. Sometimes, certain kinds of locations need special features only available on one platform. This is why, as one of the largest virtual tour companies in the US, we need to utilize all of these platforms.

    Today, I will go over my top 3 virtual tour platforms. The software I will list today is not only the best of the best but is the software we use for 99% of our tours.

    Matterport

    Odds are, if you are into virtual tours, you have seen a Matterport before. You have probably seen hundreds of Matterports already. This is because Matterport is the most popular Virtual Tour platform of all time and for good reasons.

    Matterports are instantly recognizable by the fully 3 Dimensional “Dollhouse” shown when you first load the tour. This feature is often absent from many other platforms; when it isn’t, Matterport still creates these the best. The way Matterport works is a full 3D scan is made in various locations of a property, which are then automatically stitched together by the software to create one large to-scale render with 99% accurate measurements.

    Matterports are useful for creating floor plans easily, which is useful in the real estate market. Real Estate agents use Matterports most often due to all of these features, the dollhouse, the floor plans and the realistic rendering. This saves them time and attracts more buyers because essentially anyone can tour the property for free as if they were there in person. This is efficient for agents and often leads to more calls, property tours and eventually a sale because the potential buyers already know exactly what the interior looks like before they ever contact the agent.

    If you are not a real estate agent, some of these premium features might not be necessary for the tour you need, especially with the high cost of these Matterport scans. The Matterport Pro 2 costs a couple thousand dollars alone, and this does not include the software or the web hosting.

    If you have a large virtual tour company, you can expect to pay as much as $1,400 a month to host only up to 500 tours at once. For this reason, we like to use other tours for other scenarios, which can be cheaper and benefit the client.

    Related: How Virtual Reality is Impacting Real Estate?

    Kuula

    One of the most groundbreaking virtual tour platforms you probably haven’t heard about is Kuula. Released in 2016, Kuula has worked its way up to be among the top platforms fairly quickly. The standout feature of Kuula is that virtual tours can be made of properties and locations that do not exist yet. This is especially useful for contractors or building planners to create a fully explorable environment for a building still under construction. These 3D models look very realistic and are commonly confused with real images.

    Along with this feature, Kuula can do everything a standard virtual tour platform can do. Kuula is known for its fast-loading and mobile-friendly tours. These tours are helpful for real estate and local businesses because they are optimized to run quickly on smartphones. They might not be as detailed as Matterports, but the price of Kuula makes up for this.

    For one, Kuula’s software works flawlessly with any 360 camera on the market, so there are no high-priced cameras to cause any roadblocks for a new virtual tour business. The software and hosting are also extremely affordable. Kuula offers its software for free, with very few features locked behind a paywall, as well as some of the most inexpensive hosting out of all platforms.

    Related: How Virtual Tours Can Elevate Your Marketing Strategy

    Cloud Pano

    My company works with all kinds of properties. Matterports are great for real estate listings and small businesses, and Kuula is essential for new construction projects; but when creating a tour for large areas, these platforms suffer. This is why, when we create a virtual tour for college campuses, resorts, or state parks, we use cloud pano.

    Cloud Pano works best with large buildings, facilities or outdoor areas. Technically, a Matterport is possible for large buildings, but to traverse the virtual environments, you will have to click through every pano area taken by the camera. Imagine a very long hallway. With Matterport, you will have to basically “click” your way down the hall, which can take a long time. If the building is a resort or a factory, it could be impossible to see everything the location offers in a reasonable amount of time.

    One drawback to CloudPano is that the tours need to be stitched together by hand, which, compared to Matterport, can take a lot of time. But the benefit to stitching yourself is you get to create the best tour path for the property and include or cut out specific areas. This allows my company to charge a bit more for our work because there is a lot more of a creative aspect to these tours, where expert experience provides a better result. CloudPanos are also significantly cheaper to host than Matterports, which is why it is my favorite tour platform for my business.

    Related: This Real Estate Hack Will Make Selling A Property Easier in 2023

    The future

    Virtual tours have only just started to take traction within the last few years. I believe most people still do not know about their existence unless they are business owners or in real estate. For this reason, I think the virtual tour industry will see massive growth over the next few years in terms of user engagement and tech innovations. For now, these three platforms are the best on the market for my company. However, I see this changing very soon as 3D software and 360 cameras continue to advance and the popularity of consumer VR headsets grows. I am excited to see where these platforms go in the next five years.

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    Sean Boyle

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  • Why Selling a Business Is the Next Use Case for AI | Entrepreneur

    Why Selling a Business Is the Next Use Case for AI | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Artificial intelligence has quickly become the most talked about technology in recent years. While generative AI like ChatGPT and AI-powered search engines like Google Bard and Bing are getting lots of attention, there are also some powerful innovations bringing AI to a surprising range of use cases and industries. One example is using AI to help sell your online business.

    A big trend right now among online business entrepreneurs is that when business owners get to the point of deciding to sell a business, they don’t want the process to take too long. They want to quickly, painlessly and efficiently find the right buyer. This need for speed also works for the opposite side of the transaction. Prospective buyers of online businesses don’t want to get lost in the clutter of too many choices and irrelevant listings; they want to quickly zero-in on the right businesses that are relevant to their expertise and a good fit for their investment goals.

    AI can be the missing link for more efficient online business exits and acquisitions. With the power of AI, online business sellers and buyers can get a more precise sorting and matching process to help prospective deal partners get connected faster.

    Let’s see a few reasons why AI can be the next “killer app” for selling online businesses.

    Related: Does AI Deserve All the Hype? Here’s How You Can Actually Use AI in Your Business

    Expectations are rising for online business mergers and acquisitions

    Small online businesses, such as ecommerce stores, content-based websites and blogs, mobile apps and software-as-a-service (SaaS) solutions, have become a larger part of the “Main Street” of the digital economy in recent years. As these business categories have grown, there has been increasing interest from investors and rising expectations for how to make M&A deals for these businesses.

    Selling a business is a huge decision, both financially and emotionally. It’s kind of like selling a home; you’ve poured years of time, work and effort into this asset and you want to get the best price that the market will bear. When you list your online business for sale, you don’t want it to linger on the market or attract a bunch of tire-kickers who are not serious buyers. When online business owners decide to exit, they want to quickly and efficiently connect to a shortlist of qualified buyers who are genuinely interested in buying a business and who are ready to talk about details and advance to a deal-making stage.

    For investors, the process of buying online businesses has traditionally been too full of friction and clutter. If you’re an online business investor, you don’t want to have to sort through a bunch of irrelevant listings or get spammed by sales pitches. Your goal as a business buyer is to quickly find relevant, high-potential acquisition opportunities that are a good fit for your investment goals and expertise.

    AI can help meet these rising expectations for both sellers and buyers. With AI-powered recommendations and smarter search capabilities, online business sellers can quickly get their business on the radar of qualified buyers, while prospective buyers can use AI tools to meet their unique investment goals and get access to high-potential deal flow on tap.

    Related: AI and ChatGPT Are the Future of Business Growth — But They Still Have Limitations

    Institutional investors want to find relevant, profitable online businesses

    Online businesses are not just for solo tech geeks working out of their garages anymore. Digital Main Street businesses are attracting increased interest from sophisticated institutional investors, such as family offices, private equity firms and aggregators. These larger investors have more complex needs than first-time online business buyers or solo entrepreneurs.

    For example, if you’re an institutional investor looking to buy online businesses, you typically will have a larger portfolio of online businesses that you want to match or expand. Your team will likely have a certain industry vertical or space that you prefer to invest in, as that fits your expertise and experience. You might also have certain deal size parameters or other unique data points that you’re looking for to help determine whether an investment is a good fit.

    AI for buying online businesses is an essential development for sophisticated institutional investors. Machine learning and AI-powered recommendations can help these investment teams quickly surface and hone in on a list of potential M&A targets that fit their parameters and investment goals, with higher accuracy and at scale.

    Related: Thinking About Starting an Online Business? 2023 Is the Right Time to Do It. Here’s Why.

    AI will become a ‘personal assistant’ for online business M&A

    There’s been a lot of hype and chatter about AI and what it means for the future of humanity and how people work. Will AI replace all human knowledge workers? Will AI make people obsolete? I believe that these fears are overblown. AI will be like any other technology that humans have developed: as we learn how to interact with these tools and build them into our workflows, AI will help people work better and faster. It might eliminate a few jobs in the short run, but it will ultimately create many more new opportunities for humans to do more of what they do best.

    Here’s how that might look for online business M&A. Think about the traditional process of buying or selling a business in the pre-digital era. You had to work with a business broker. You had to set up a listing. You had to market the business and look for qualified buyers. Some deals might have happened by word of mouth or within a known universe of investors, but the process took much longer and was unnecessarily complicated and costly.

    Today, as AI capabilities continue to improve, we’re going to see AI become a kind of “personal assistant” or digital intern that helps online business buyers and sellers do their deals faster, more efficiently, and with greater precision. AI will be a friendly digital helper that is with you at every step of the way — offering up smarter searches, better recommendations and more accurate results, leading to more constructive conversations for business sellers and investors.

    AI is going to drive big changes in how every industry operates, and the online business M&A space is no different. But the future is bright. By eliminating friction, clutter and costs from the process of buying and selling online businesses, entrepreneurs can do more of what they do best: building successful companies and delivering value for customers.

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    Blake Hutchison

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  • Selling Your Business? Do These 6 Things Right Now. | Entrepreneur

    Selling Your Business? Do These 6 Things Right Now. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    According to data from the Small Business Administration, more than half of the small business owners in the U.S. are over the age of 50. Because of this, many of us are starting to think about the future and possibly one day selling our businesses. This is why research site BizBuySell reported that the business-for-sale marketplace grew almost 5% last year, a gain of 19% since 2020 and the first half of 2023 has already “experienced strong year-over-year gains.”

    There are many reasons I’m expecting to see continued growth in the number of small business owners looking to exit their companies over the next few years. Our population is aging and much of the “boomer” generation is at retirement age. Capital gains and estate tax rates — for now, at least — remain at historic lows. Stock market volatility is driving some people to seek more stable, controllable returns for their money. And a growing number of millennials have now gained enough business experience to want to venture out on their own, and buying an existing business rather than starting from scratch is an attractive option.

    If some or all of these factors are making you think it could be time to sell your business, then know that this won’t occur overnight. You will need to plan and take these six actions before dipping your toes into the market.

    Re-visit your buy-sell agreement

    If you have other equity partners, I’m hoping you have some type of partnership or buy-sell agreement which indicates the process that will need to be followed if one or more partners exit a business — be it voluntary or not. This agreement addresses issues like valuation, insurance, taxes, transfer of shares and death or sickness of a partner. If you and your partner(s) have agreed to sell your business sometime in the future, then it’s critical to update this agreement so that everyone’s on the same page as to how the transaction will go. No buyer wants to walk into a messy divorce.

    Pay for a valuation now

    Humans always think that we’re more important than we really are. And business owners always think that our businesses are worth more than they really are. Before entering into the buy/sell market, it’s important to get a reality check. To do this, I recommend hiring an independent appraiser (ask your accountant or attorney or search online) and letting a professional without an agenda tell you just how much your company may be worth. Your appraiser should have a CBA (Certified Business Appraiser) or ASA (Accredited Senior Appraiser) qualification. Getting an appraisal done earlier will be a reality check and allow you to zero in on the areas of your business that need to be fixed in order to increase your company’s value. That way you can go into the market with a price for which you have confidence.

    Do a document check

    Take the time now to scan every important (and current) document, contract, agreement, tax return (from the past three years, at least) and written record that your company has. This includes any and all paperwork that supports your employee, real estate, insurance, intellectual property, contractor, leases, loans, supplies, sales and government obligations. Organize and save these documents online where they can be shared with permission because you will absolutely be asked to provide them. Don’t make this a last-minute fire drill.

    Bring in a technology expert

    Technology has become a significant factor in the sale of a business. We live in a big data world and buyers are looking to purchase information that they can use. They also want to make sure that a target’s systems are up-to-date and secure so that big investments and changes can be minimized after the sale of a business. To do this, you’ll need to bring in an outside technology firm to evaluate your network, hardware, security, software, and databases and give you an honest report on just how out-of-date you are and what investment is required to bring your system into (at least) the 19th century.

    Visit Home Depot

    When selling your business, you’re going to be visited by many outsiders. Perception is important and if a potential buyer drives a car over potholes in your lot, trips over cracks on your sidewalk and has to wipe away drips from a leaky ceiling that’s going to have an impact on what they think of you as an owner and the valuation that they would apply to your business. Like any homeowner looking to sell their house privately, you’ll need to spruce up your physical location to make it look attractive and up to date.

    Finally, assemble your team

    You are not going to successfully sell your business at the best value possible without a team effort. Now is the time to think about and assemble your advisory team to help you through this transaction. All important, in my opinion, is to have a great financial person — a certified public accountant or similar — to work alongside you as, in the end, this transaction is all about the numbers and you’ll need someone with a financial mind and good communication skills to help you drive it. You’ll also need a good attorney to review and create agreements. There may be other experts on the periphery — like a specialized tax person or an insurance advisor. I also strongly recommend using a business broker and making that broker part of your team as well. Brokers serve a vital function — they are experienced in buying and selling companies and can use that experience to move a transaction forward, despite the inevitable obstacles that will be faced.

    These are the six things you should be doing before you even put your business up for sale. Notice anything? How about this: We should all be doing these things regardless of whether we plan to sell our businesses, right? Our job as business owners is to maximize the value of our companies so that they continue to grow and succeed. That’s what a potential buyer thinks. We should be thinking the same.

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    Gene Marks

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