Do I have to create a business portfolio and an exit plan when selling a company? Are you staying or leaving?  This may appear counter-intuitive, but when you are selling an organization, update your existing business plan—or create one if none exists.

Although many businesses name their annual budget a "business portfolio," it isn’t what we are talking about here. A business plan is a written document that management follows to develop, grow, and manage a business. Some business are mistaken and believe their annual budget is their business plan, when after all that is nothing farther from the truth.  Business plans address strategic and operational promblems and different strategic plans or goals for the organization, as a whole. They describe your  companies present status and plans for the long run and they map financial, operational, and promotingmethods that enable a business to reach its goals.  A potential buyer desires to determine that you just and your team have the foresight and discipline to try and do this level of proactive planning.

If you have never created a business forecast, believe it or not, currently is a right time to pull one together. You may realize that you have an opportunity to extend the value of your company in an exceedingly comparatively short time—or you may discover something of hidden price that will facilitate your sale price.

Besides providing strategic data in prepping your business for sale, your business  portfolio,  becomes part of your  selling package when you sell. It must contain no less than three years of the audited financials, and of course at least three years of monetary planning going forward. Sometimes, this is often the standard buyers request.

Additionally, summarize your business and its growth trends and embody a review of competitors and how your business is positioned against them. A buyer can need to perceive the scale and health of your industry.

This may be a chance to put into place plans to deal with explicit challenges your company faces.  For instance, if your business has growth challenges due to global competition, hunt for each the healthiest areas of the industry and business and focus building around them, or create new capabilities to deal with the stressed business circumstances. These would then be documented in the business plan.

An objective SWOT analysis (strengths, weaknesses, opportunities, and threats) may be a customary element of a business plan. Although it could be troublesome for you to be objective—you’ll be inclined to overstate strengths and downplay weaknesses—an honest discussion concerning weaknesses makes you a more reputable seller. In addition, you’re legally and morally obliged to disclose everything of relevance to prospective buyers.

Hiring an advisor or consultant may keep you objective and move your preparation for sale more swiftly, because a radical and objective SWOT analysis helps buyers confirm what future investment they have to make. When we do that work with clients, we realize that credibility will increase with the inclusion of any third-party business reports, analyses, forecasts, and similar documents.

Conjointly perhaps counter-intuitively, this could be a smart time to revisit your mission or vision statement as well. Does it capture your business principles and goals? Does it send the message that will be both congruent with what your organization does and that can attract the client you would like?

It may appear like writing a business plan when you are planning your exit strategy is like closing the barn door after the horse has left.  However, you can be sure potential buyers will wish to determine one.  It will force you step-by-step in an important exercise that will help you see the business as they will.

I invite you to use these concepts as you begin the journey to sell a business.

Marian Cook is a highly sought after business transition expert and speaker with over 25 years experience helping business owners design their best-life exit strategy, and improve their business performance and valuation.  She is the co-author of “Selling Your Business For More:  Maximizing Returns For You, Your Family and Your Business” (published by Macmillan).  If you are ready to sell a business and jump-start your business sale process, connect with Marian via her free tips, articles, checklists and blog at Business Transition Experts.

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