How to prepare for a sale (while still growing)
Growing a Business
Growing a business, selling a business. They sit at opposite ends of the business lifecycle. Yet, getting the most out of either goal incorporates common fundamentals. And taking steps to be ready for a sale doesn’t mean you have to stop growing — in fact, these objectives might even be complementary. Below are some tips to get ready to sell, but also help you grow in the meantime.
Organize Your Finances
Whether the plan is to sell tomorrow or hold onto the business forever, properly organizing finances is crucial to monitoring the health of the business. And yet, it can be easy to overlook. But staying on top of financials isn’t just about making sure the right taxes get paid at the end of the year. It’s about creating actionable data to make informed decisions moving forward.
Of course, this requires up-to-date bookkeeping, which should be the first step. Bad data leads to bad decisions, so whether it’s done internally or externally, there needs to be an accurate accounting of the money going in and out of the company. It’s also beneficial to move to a monthly accrual-based accounting system to make it easier to review finances. From there, that information can be used in conjunction with managerial accounting, which is designed to help inform decision-making. In essence, the easier it is to review accurate, recent data, the easier it is to make tough decisions that could save or even make money in the future. And when it does come time to sell, the first thing a potential buyer will want is precisely the financial data that’s now organized.
Organize Your Sales Numbers
In the same vein, sales numbers should be easy to read and sort, tied as they are to your bottom line. This is about more than just total units sold. That data matters, of course, but again, it needs to be actionable, which means getting granular. Everything from lifetime sales numbers to last month’s sales numbers is important, while breaking it down by individual ASINS/SKUs as well as broader categories helps create a more complete picture. Furthermore, geographic and demographic data opens up broader opportunities to increase sales. That’s, ultimately, what a business is trying to do.
But without understanding the numbers behind the bottom line, it’s almost impossible to create an actual strategy that increases sales. Having a great month without a way to replicate it is a missed opportunity. Too many of those, and growth will elude even the most brilliant business plans.
Track Your Marketing and Advertising
There’s a theme developing, but there’s a reason having actionable information keeps coming up. The internet offers the ability to track all of the data anyone could ever need. Failing to do so means giving a leg up to your competitors, because they will be tracking that data. And if no one is monitoring the success of a marketing and advertising strategy within the company, you’re just throwing things at the wall and not even bothering to see what sticks.
But beyond the data, it’s important to track and organize materials as well. A proper integrated marketing and advertising strategy is about creating consistent messaging at all levels of communication. That’s easier to do when things like company colors, font types, and branded graphics are all easily accessible to anyone in the organization. It prevents having to start from scratch every time there’s a new campaign, and it allows anyone to create a campaign that maintains the brand voice that customers have come to know and love.
Understand Your Vendor Relationships and Supply Chain
Whatever the final sales numbers end up being, it all starts with fulfilling orders on time. It’s what makes a business a business. None of the rest of it matters — not the marketing, not the sales, not the projections — if you’re not getting products to customers when they expect them. That being said, this is a largely behind-the-scenes process. It’s an integral part of day-to-day operations, but it’s not necessarily integrated with day-to-day operations. In many ways, that separates it from everything that’s been discussed so far.
What it has in common, however, is that incorporating it into day-to-day operations will make a major difference. Tools like vendor scorecards help track (there’s that word again) vendor performance, which then allows for better optimization of the vendors in your ecosystem. A better understanding of the supply chain also opens up several avenues, including planning ahead regarding inventory and communicating better with customers in the event inventory is delayed. It also raises the overall value of the company, as it’s one less thing a potential buyer will have to worry about incorporating once they take over.
Optimize and Sort Products and Listings
Finally, the product itself. A great listing can make all the difference between your product floundering and your product thriving. It starts with a great picture that shows off all angles and relevant functions of a product. Your copy should be informative, and your title and text should include relevant keywords. It’s also crucial to build a strong review base.
Then, it’s important to have all of these listings, and their related assets, organized in such a way that all of them are easy to find. Have URLs, product specs, and images easily accessible. Track your pricing and pricing history, as well as the success (and failure) of those price points. Product guides and documents should also be readily available, as should any FAQ documents.
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Ultimately, establishing yourself in your niche is both tremendously beneficial to the growth of the business and its value in a sale. In short, SKU density is about creating a customer journey with more avenues to one of your products. A customer searching for mixing bowls is more likely to buy one of your products if you offer a variety of mixing bowl sets than if you offer one set of mixing bowls, a power drill, a dog bed, and a throw pillow.
This is also where all of that tracking comes in handy. That data shows what’s working and what isn’t, as well as opportunities for growth, especially as it relates to introducing new products. Getting ahead of the curve on your competitors means everything to your bottom line, but it also means everything to your customers, who can trust that your products will meet their needs. It helps define what your business does and who the target audience is, all of which will prove lucrative in the event of a sale. A buyer that knows exactly what you sell and who you sell it to will have a more compelling reason to acquire your business.
Track, Test, Improve, Repeat
If all of these tips have one thing in common, it’s that they’re designed to make life easier, whether for growth or sale. Selling in an online world, one in which rules change regularly and trends end just as quickly as they start, requires the ability to pivot. Having data helps make those pivots easier, and having everything organized prevents things from getting lost in the shuffle. After all, a clean, organized house is both easier to live in and easier to sell, and it’s the same for a business.
For more information to help grow and prepare for a sale, download our white paper 7 Things That Can Help Maximize Your FBA Value. If you’ve already implemented some of the tips above, or are simply ready to begin exploring an exit, reach out to us.
Adam Epstein is the VP of Mergers & Acquisitions at Boosted Commerce. With more than a dozen years of experience in the industry, including time as a Principal at Lion Capital, he has completed more than $1 billion in acquisitions and investments over the course of his career. He holds an MBA from Stanford and a Bachelor of Science in Applied Math – Economics from Brown.