Wednesday, 2 June 2010

Selling Your Business Before You Start - Lessons from a Successful Entrepreneur

Are you thinking of starting a new company? In the midst of a start-up? Looking for an exit for an existing business?

I successfully sold my internet-based company to the Financial Times in 2007 (Exec-Appointments Ltd). Here are a few tips to consider when you are thinking about your ultimate exit:
  • Brainstorm a list of possible buyers including specific companies and types of companies. Research the kinds of companies that they have bought, what they paid and what happened after purchase. What is the 'voice' of the website of each of the companies (for example: elegant, value for money, fun, serious, etc.)?
  • As you develop your business concept and website keep your shortlist of possible buyers in mind. Would they feel an affinity with your style? Would they naturally consider your business as a possible purchase? Would their customers see your business as complementary to what they do?
  • Get advice early on from those who have 'been there, done that'. My accountant was in his late 70's when he started advising us. His experience was invaluable in ensuring our financial position was attractive.
  • Become part of the industry 'grapevine'. Every industry has one. Make sure your company is mentioned in influential publications where buyers will see your company and be tempted to learn more. Either learn the industry inside out or make sure someone in your team is an expert.
  • Spend money like it is your own (in most cases it probably will be!). Having new desks may seem like a nice idea at the time but spending your money on ensuring your product is the best it can be will yield more dividends that a plush office.
  • Hire the best people you can afford. An A+ person can do the work of two C's. Don't compromise just to fill a seat.
  • Find out early how businesses in your sector sell - is it on revenue or profit? You could end up chasing the wrong goal (for example trying to become profitable when the market just wants growth and revenue).
  • Cut your losses quickly. I fired one sales person after she had been with the company four hours. I could immediately tell that she was a liability not an asset by listening to her speaking to potential customers.
  • Understand the customer experience. Walk in your customers' shoes every day. This is exactly what potential buyers will be doing.
  • Keep a due diligence book. A good example can be found at This will ensure you have all the documents you need to hand when a possible buyer is interested.