Growth Potential and the Sale of Your Business

When a buyer approaches an owner about purchasing their business, many are inclined to talk about the great things that the business has done in the past.

Accolades, awards, sales records, and the length of time you’ve been open are all things to be proud of, but buyers are looking towards the future. They want to know what the company can do when new opportunities and risks are introduced. The ability for your business to adapt to these changes is called its “growth potential.”

Does Your Business Have Growth Potential?

When it comes to understanding your business’s growth potential, it really comes down to predicting long term health. Based on both qualitative and quantitative data, you have to be able to sell the idea that you’ve built a solid foundation for further expansion to take place. Stagnating growth isn’t going to be appealing for buyers looking for an opportunity to help the business flourish.

To get a better picture of your growth potential, it’s useful to consider these three factors: processes, scalability, and operation.

When considering these factors, asking yourself questions and seeking the answers can give you a better picture of business. We’ve provided a list of questions to get you started:

Processes

• What are the goals that your business is trying to accomplish daily? Weekly? Monthly? Quarterly? Yearly? Long term?
• What specific steps do you and your organization structure take to accomplish those goals?
• What successes have you had following these specific steps?
• Ideally, what other resources would be necessary to perfect your business processes?
• Who takes care of individual goals and the means of accomplishing them?
• How do your current business processes contribute to the overall growth of your business?

Scalability

• What would happen if you suddenly had double the amount of customers? What about 5x the amount of customers?
• What demographic seeks out your business the most? The least?
• What have you tried to increase your demographic reach?
• What geographic region is your business most successful in?
• What other geographic regions would your business be successful in? If none, why not?

Operation

• When looking at past and current growth, has your business grown faster than, as fast as, or slower than the economy?
• If the answer is slower than, what operational shifts would help it grow at least with the economy?
• What operation processes are in place for fluctuations in business? How are inventory, hours, and budget adjusted accordingly?
• What pieces of equipment are still being paid off? Of those, which are critically necessary to the success of the business?
• What advertising, social media presence, and digital marketing measures are currently being taken? If none, why? If they are being taken, how are they performing?

While you are leaving your business and celebrating all you’ve accomplished, a buyer is just getting started. They want to see what your business brings to the table in the long term, to ensure that their investment is going to pay off. Understanding your growth potential and all of the factors surrounding it can help you take steps today that will increase the sale price of your business down the road.