Building a Sellable Business – How Sellable Is Your Business?

Do you know how much your business is worth when it is time to sell? According to Intuit Small Business Blog, angel investor John Warrillow answers this question. He determines how much a company is valued at using a Sellability Score. He developed this method based on eight influencers.

To know how much your company is worth is as important as knowing your company well enough to sell it. Sellability is equivalent to knowing when your company is flourishing and thriving. When it is sellable, the business has more opportunities to prosper. Somehow, the business owner becomes one with the company in such a way that the business can exist on its own, but it still needs the owner to complete the puzzle. The owner is the primary mover of the company.

If you need to improve the sellability of a company, determine its weaknesses then focus on these parts and try to improve.  You need to look at all aspects of the business. Although the factors that make up the Sellability Score are weighted equally, some may have a bigger impact than others. You need to  look for the factors that might hinder your company from becoming sellable. In addition, by knowing what your sellability strengths are, you can focus on them. Your company’s growth capacity is the primary determinant of how sellable your company can be. 

Several factors influence the “sellability” of your company, according to entrepreneur and investor John Warrillow. Some of the key factors include its growth potential, financial performance and cash flow, he notes. “I think a sellable company tends to be more fun to run. It’s a marketable, valuable asset,” according to Warrillow.

The factors would include how well your company  includes how well your company performs on the financial aspect, what the potential of your company for future growth and expansion, how dependent the company is to the people integral to the business, including the customers and employee, cash flow, the revenue, customer satisfaction, monopoly control as well how the company would be able to function well with or without the owner.

Photo by the UMF

One Response to “Building a Sellable Business – How Sellable Is Your Business?”

  1. Clarence S. Day III Says:

    Great article!

    I would add credit management / status is important to produce a business valuable to buyers. What is your business Paydex? How are your vendor or supplier credit lines? And lastly, what is your “public” credit status; meaning your public credibility as computed by companies like Angie’s List, Yelp, etc…

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