When is the best time to start thinking about your business' exit? 5 years ahead of time? 10 years? Our guest on today's episode, Tallat Mahmood, explains when to start planning and how to do so most effectively.
For the last 12 years Tallat has been working with small and medium-sized businesses to raise millions of capital for growth and has helped with mergers and acquisitions transactions for exits. And he shares what he's learned from those experiences including the essential elements in a business plan to raise capital and sell your business plus the biggest mistakes he sees companies make when creating a business plan.
Listen to this episode and discover:
- What is the best time to think about selling?
- What creates the greatest value for a potential owner?
- What types of companies are best suited to which types of exits?
- How to make accurate financial assumptions if you're just starting out.
- What is the sensitivity analysis approach and how should you use it?
- And so much more…
Episode Overview
In the dozen years he's worked with various companies that are ready to sell the biggest mistake he has seen is they aren't as ready to sell as they think they are. In fact most companies are grossly underprepared.
To avoid that same fate Tallat encourages you to begin with the end in mind - consider your exit strategy from day one. Doing so will help you be prepared to sell of course, but it will also help you grow your business most effectively between now and the day you sell.
If your business is already underway create a business plan or update your existing one. Tallat says it's a must for any business to put together a business plan. And there are certain elements he considers necessary in that plan.
The first is your product or service. In this section of the plan you must explain the demand for your product or service, the need it fulfills and the pain points of your customer. If you do something better than the competition highlight that here.
The next section is the target market. Who is yours? Identify them and be specific; then discuss the size of your market, the future of it, how it will grow, who else competes in that market space, how strong they are and how quickly this particular market is going to grow (so you can show the growth potential of your business along with it).
Next is sales and marketing. Explain how you're going to reach your target market, how you'll sell to them and get in front of them. Detail how you will reach your first 1,000 customers and how they will reach out on your behalf to generate your next 1,000 customers. This should be strategic and thorough.
You'll also want to have a section for your financials including metrics to show you are on course and your forecast for the future (i.e. what you expect your business will do in the next few years in terms of cash, balance sheet, etc.). You'll also need to explain your assumptions here, so give conservative, aggressive and mid-range projections with explanations within each.
Tallat also shares what to include in the team management section (and why it's so critical for selling your company to any investor), the types of exits available for different businesses and other key factors investors look at when evaluating your company. His expertise on this episode is plentiful, get ready to learn and then apply it in your business today to grow your revenue!
Discover more: http://www.growmyrevenue.com/podcast/tallat-mahmood/
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