Potential buyers who read about a business for sale are interested in knowing how it can be grown once they bought it. The growth potential of a business plays a major role in its value. While buyers will purchase a business at a price predicated on current and historical cash flows, their main motivation is the opportunity to grow the business beyond its current size.

Therefore, in order to get a premium price on the sale of a business, the seller should outline a tactical growth plan that would delineate open opportunities that can be tackled and exploited by a buyer to increase sales and profit. It is important that existing growth opportunities be realistic and clearly communicated in writing. This document would serve as a template for discussion during initial buyer meetings. It would cohesively paint the larger picture of your business and translate into added value.

When an owner can describe realistic opportunities for growth that specifically illustrate the reasons why cash flow and the business itself will grow after it is acquired, a higher value can be achieved. A documented growth plan demonstrates the viability of the company’s future and may identify opportunities that a buyer had not considered. The obvious objective in outlining your growth strategy is to show how sales can be increased. Some areas to consider in developing a growth plan:

  • Are there additional markets that a new owner should pursue?
  • What additional products could be delivered to existing customers?
  • Where are the best profit margins realized and can they be expanded?
  • Can new customer segments be reached?
  • Can your technology be licensed?
  • Will demand for your product or service increase as population grows?
  • How will enhanced marketing campaigns and sales efforts affect growth?
  • Are there opportunities to grow through acquisition?
  • Can growth be achieved by expanding geographically, increasing manufacturing capacity, or adding multiple locations?
  • Would additional hires impact growth?
  • Or, would streamlining the workforce be more beneficial?
  • Is franchising feasible?
  • Are there online strategies ripe for growth?
  • Are there areas to explore that could decrease operating costs that you have not implemented?
  • Would the company benefit through additional workforce training and education?

The above list is not meant to be all-inclusive, but touches on the key areas that are common to most businesses for potential areas of growth.

See our article: Ten Value Drivers That Increase Sale Price of a Business