It is no secret that finding a way to make tons of money is the easiest way to attract guys with the money. The problem lies in the fact that everyone has different tastes, so it’s difficult for one strategy to work on every guy. So what should women do? Here are seven factors that create an attractive business and can help you outshine your competition.
Financial buyers (aka private equity firms and people that look like them) have billions of dollars to spend on businesses, making a sale to a financial buyer one of the most popular methods for mid-size company owners to achieve liquidity (liquidity is a fancy way of saying “I’m wealthy, bitch!”). Please keep in mind that each industry is unique, thus this will be most useful for enterprises in the consumer, industrial, and service sectors. Companies in the media and technology industries sometimes have their own set of regulations (particularly in terms of profitability; the rest is rather typical across the board…).
These recommendations will help you think strategically about what builds long-term value for a firm, even if you’re a tiny company. As your company grows, use them as objectives and principles. #1- Be at the top of your game…
Who doesn’t want to be on top (please keep your heads out of the gutter)? Market leadership is a critical criterion for success. Buyers seek to purchase the category or specialty leader. Maybe they’ll opt for #2, but purchasers don’t want to buy the kid who is selected second to last for playground kickball, if you know what I mean.
#2-…But With Possibilities
Buyers want you to be a category leader, but they also want to know you have a strategy for future expansion. When you’re at the top of a mountain, the only way down is down. To retain attractiveness, make sure you have a solid development strategy in place.
Cash Flow (#3)
Financial purchasers are drawn to lucrative businesses, with an EBITDA (profits before interest, taxes, depreciation, and amortization) of at least $2 million being a common aim. There are a few companies that will go as low as $1 million, but few that will go lower than that (unless you’re in the media or IT sectors…).
#4: Customer Concentration Is Low
If you are too reliant on a single client (or a small group of consumers), you are putting yourself at risk! Depending on the sector and your entire client list, the range of customer concentration that causes a private equity company to “go limp” on a transaction is between 10% and 25%. You want to maintain your customer concentration as low as possible, within reason (you still need to be able to handle all of your clients, and you don’t want to lose your best customers).
#5-Offer a Wide Range of Products and Services…
Putting all of your eggs in one basket on a product that may go out of favor is risky, much as having all of your eggs in one basket on a product that may go out of favor. Again, this varies by business, but if you offer 110 goods and 98 percent of your sales come from a single SKU, you should be concerned. Obviously, some sectors are more concerned about this.
#6…However, This Isn’t a Random Offering
While variety is beneficial, the goods and services you provide should be connected so that a financial buyer may discover potential rivals who could be interested in purchasing the firm after you depart. This implies that the items should be distributed via comparable channels, marketed to similar clients, or be the same sort of product at various price/value levels. That will be an issue if you offer popsicles, whips, and garden shears (and is definitely not desirable).
#7-You
Financial investors want to put money into a company but don’t want to operate it. They require capable management that can carry out the development strategy. So don’t expect to be able to go to the beach and drink margaritas after you sell your home to a financial buyer. It’s also beneficial to have motivated management who wants to remain in the firm for at least a few years, so consider that into your succession plan.
While every sector, organization, and “deal” is unique, these attractiveness elements can serve as useful recommendations for developing your firm’s strategy.
Flickr user epSos contributed this image.
