How to Plan an Exit and Sell Your Manufacturing Business?
Many manufacturing businesses in California fail to sell because they are simply not positioned properly to be acquired or sold, use the five steps below to learn how to sell your manufacturing business fast and for the highest price.
Reasons to Sell your manufacturing business
Some of the common reasons why you may decide it is time to sell your manufacturing business are:
- Lifestyle changes– Some lifestyle changes may need you to take a different direction and leave your business. For instance, you have a new hobby, retire and step back, health issues, or family issues that force you to spend most of your time away from your business.
- Burnt out- Too much of anything makes you tired and lose motivation, no matter how good it is; it is normal to feel burnt out if you have been in the business for years and wish to try something new or move on into a new life-changing phase.
- New opportunity– As a serial entrepreneur, you are constantly thinking of new ideas. When a better opportunity comes along, it can be a smart decision to sell your manufacturing company and free up capital for something new.
You want to start to develop a business exit strategy that can help you identify a plan to transition or exit your manufacturing business.
How much does my manufacturing company worth?
When you decide to sell your manufacturing company, one of the first things you need to determine is how much does your manufacturing company worth. If you are sure of the exact worth of your business, you can come up with the price to give to a prospected buyer.
You may ask, “How much money is reasonable to sell my manufacturing company?” Some of the ways to determine how much your California manufacturing company is worth include the following.
It is possible to tell how much you can sell a manufacturing company based on its annual income.
A manufacturing business broker will help you determine how much the manufacturing company is worth based on the value of comparable businesses.
Value of Assets
The value of a manufacturing business includes all assets, fewer liabilities, and any debts.
The value you get after making these calculations gives you an idea of how much the business is worth.
However, you cannot get the exact value that the business is worth since, in most cases, a business is worth more than its assets.
Discounted Cash-Flow Analysis
This formula looks at the business’ annual cash flow and uses it to predict the future. You then use a Net Present Value calculation to discount the forecasted cash flow value to today.
You can find a net present value calculator online and use it to do a discounted cash-flow analysis.
Use Non-Financial Formulas
You can use other methods rather than numbers to help you determine your company’s value. For instance, you could consider its strategic position and potential strategic value to give you an idea of the approximate price of your manufacturing business.
Check out this guide to help understand business valuation methods.
Increase Business Value
Now, you might find yourself thinking, “This is not the highest value that I can sell my manufacturing business.” However, there are ways to increase the manufacturing company’s value and push up the value you receive when you sell the business.
Find below tips to improve your company’s value:
Increase Your Sales and Cut Expenses
Restructure your manufacturing company focuses on cutting expenses and increase value and make it competitive in the manufacturing industry space. You can consider improving the production of goods process and find a new market opportunity to expand or penetrate. Offering new products or improve manufacturing services will also help your business to provide more value.
Also, strive to cut expenses in the manufacturing business as much as possible. Make sure that whatever you do, you don’t jeopardize quality and value.
Agreements with Employees, Suppliers, and Customers
The non-formal agreement may seem more popular and friendlier. Formal agreements have greater advantages, such as secure the manufacturing company on the supplies and operations front.
On the positive side, legal contracts help boost the value of your company.
Revenue Growth: Sell your Manufacturing Business
When any strategic buyer is thinking about acquiring your manufacturing business, one of the main focuses is to check the consistency of revenue growth.
Having consistent revenue growth even at low rates is better than having high earnings followed by surprisingly low earnings. Even at low rates, steady growth will prove to the buyer that the business will likely improve with time.
Get Your Manufacturing Business Ready for Acquisition
Unlike another asset sale, it is slightly possible to sell your business quickly. Instead, you need to get the business ready for sale. The better-prepared businesses are for sale, the more ale price they bing.
The steps to follow when getting the business ready for sale are:
- Identify potential buyers
- Solve any legal suits in the business
- Plan one on one meetings
- Act hard to get
- Get your numbers ready
Get a Manufacturing Business Broker On Your Side
Having a manufacturing business broker is an added advantage for you when selling your manufacturing business since they help increase the value of your company. Here are some lessons to remember when you want to sell your manufacturing company.
Some of the ways through which the manufacturing business broker helps increase business value are:
- Provide outside opinions.
- Give you a plan
- Add prestige to the business
Final Take Away
To sell your manufacturing business is no easy task, especially for the manufacturing business owner. Armed with key tips on increasing the value of your company, you can now kick off selling a manufacturing business without a hitch. With a business broker at your side, you will sell at the highest price.
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