There are many examples in the business world that prove that it is not just profitable to build a business but also to sell one. It may not be the type of idea you suggest to a business in its infant stages but if you can make a fortune out of selling it, would you still not consider it?
It may not be the intention with which most businesses are founded but isn’t the idea of making millions by selling your business an appealing Plan B? After all, people have turned into millionaires and billionaires by selling their business. Don’t believe me just read the acquisition stories of Hotmail and WhatsApp.
The WhatsApp and Hotmail Story
The news that Facebook had acquired WhatsApp took the business world by a storm. When this company was founded by a college dropout, who was rejected by Facebook, and an ex Yahoo engineer, little did they know that they were building a business which would be sold five years later for a whopping $19bn.
Who would’ve imagined that a company with just 32 employees were managing close in on 450 million active users? The story of this company forces us to reconsider our belief that a business cannot grow without marketing because WhatsApp did not spend a single dollar on its marketing but still had a user engagement of 72%.
Many years before Facebook acquired WhatsApp; there was another acquisition that had become the talking point of the business community. An e-mail based service developed by two Apple hardware engineers had been acquired by Microsoft for close to $500mn. When the company was bought by Microsoft it had a user base of about 8.5mn subscribers and it’s worth bearing in mind that in today’s money the deal would be worth almost $800m.
The first lesson that we should learn from these major acquisition stories is that before you sell a business you first need to turn it into a phenomenon. Now you may or may not be able to strike a deal like Hotmail and WhatsApp did but there’s always something you can do to make your business more sellable.
Building a Great Business
Great businesses cannot be established by reading online articles or following footsteps of others. Not everybody is blessed with the kind of business acumen to come up with an excellent and unique business idea. It is a primary requirement and the most necessary tool to make a good business great.
- Branding that Distinguishes your Brand
When Steve Jobs was introduced to the design of the PowerBook G4 he had a major concern. When the laptop screen was closed the Apple logo was facing the user but upon opening it the logo appeared upside down to others seated directly in front of it. He believed that it was important that everybody else in the vicinity perfectly understood that an Apple is being used.
- Targeting the Right Market
The most successful businesses in the world have been those that have made the lives of people easier. Before you jump to the manufacturing of a product you should try to think about the target audience for which you are developing the product. Ask yourself how you are simplifying their life. Think of a particular group of individuals and try to determine whether the product is useful enough to be used by everyone.
Growing the Business
Until you reach the number one spot in your industry you will be engaged in a constant pursuit of growth. Growth is one of the biggest challenges of a business because growth means getting more people to use your product and this is never an easy task. But here are few things you can do to achieve substantial growth in your business:
- Offer Unparalleled Customer Service
A business transaction should always be measured in means beyond the usual exchange of money. It is an experience which is impacted by the kind of user experience you provide through your product and the experience that the user has while interacting with your company in order to buy the product.
- Filter Out the Noise
A good business idea is about the right timing. There will be times when you will have brilliant idea but the timing to implement it may not be suitable for the business. You need to learn to take good decisions based on intuition and instinct. For instance, many businesses struggle with the decision about approaching venture capitalists or contacting an alternate finance provider for funding products such as cash flow. Some believe approaching them in the early stages is a good idea while some believe they can only be approached once a minimum turnover is achieved.
Selling a Great Business
There are some extremely important aspects involved in selling a business and they are as follows:
- Auto play
If you want to build yourself a business that can be sold for a generous amount then you should look to implement a business model that doesn’t rely too heavily on you. A business which cannot function a day without you is a business that buyers will be apprehensive about buying. The best thing you can do to your company is ingrain a culture in which each person is responsible for their work and nobody needs to be spoon fed. It may be difficult for a few business professionals to implement such a culture as nobody wishes to relinquish control over their business, but it will prove to be more beneficial for the company in the long run and will become like second nature if it’s done early on.
- Be Ahead of the Game
In order to be ahead of the game, you should have a clear roadmap of where your business is heading in the next 3-5 years. Irrespective of whether you intend to sell your business or not, this is a crucial step that most business owners should take. The company should know exactly where they are headed and what their financial position could be in a few years from now. It is necessary to demonstrate to your employees that you have a vision for the company and to make them understand that in the growth of the company is tied to their own development.
- Consult a Broker
Negotiating mergers and acquisitions is not a simple task that anybody can do it. It requires the expertise of a person who can serve as a middleman and keep the interests of both companies in mind while negotiating a deal. When you believe you are ready to sell your business you should contact a professional broker to take things ahead. They have a good network of investors and buyers and their contacts can prove to be immensely helpful in accelerating the process. They may charge an overwhelming fee for their services but it is nothing compared to the relief that you will experience by entrusting them with the responsibility.
There are many other factors at play when we talk about a business becoming successful. But primarily these factors are directly concerned with the abilities and acumen of the one heading the organisation. It is their vision that is reflected in every accomplishment and their thoughts that reverberate to every corner of the office.