As the CEO of a company where our business model is acquiring other businesses, I spend a lot of time networking with startup founders and entrepreneurs, and I see some people who are really prepared, and a lot of people who really aren’t.
Maybe that’s because planning your exit before you scale feels like tempting fate. Maybe you’re busy with the dozens of roles you have to take on to start a company in the first place. Or maybe you’re really passionate about running your business, so it doesn’t seem like you need a plan to hand it off.
The real reason to have an exit plan isn’t so that someone can acquire your business (although it’s a nice bonus to be prepared if it does come up). It’s because it makes your business more resilient for anything that comes up. And as all business owners know, “anything” can and will come up (usually at the worst time).
What follows is a list of great ideas to get your shit together whether you want to sell right now or not.
Don’t Mix Business and Personal
The same advice that goes for relationships goes for your records. This one’s super basic, but if you started your business as a side project, a lot of times you wind up paying for its expenses personal bank account because it’s convenient. Even solo founders bringing in a small (or no) MRR should:
- Pay all business expenses from a business bank account (and if you have multiple startup projects going, each one should have its own separate account).
- Set up business email accounts that are segmented by function (like support, sales, etc.) and easy to hand over. If you ever want or need someone else to handle one of your business functions, you don’t want to have to weed through and pull out personal emails.
- Have your business website hosted separately from any personal projects or other business ventures.
Get a Password Manager
Passwords are a pain in the butt, and as a business owner you’ll have about a million of them for everything from your payment gateway, your web hosting, your company’s social media profiles, to all those email accounts I just said you need. Here’s the truth: People are terrible at making passwords. That’s why so many businesses get hacked. Sign up for 1Password or LastPass. They’re well worth the few bucks a month you’ll pay to waste any more time thinking about passwords.
Look at Your Profits & Losses Monthly
Some founders love this task, others hate it, but you gotta do it. It’s not enough to know that money is coming in. You need to know where it’s coming from, where you should be investing more, and where you should be trimming fat. The discipline of managing expenses while growing MRR can be the difference between a good company and a great one.
Speaking of Looking at Data Monthly...
Analytics and KPI’s are two other things you should be tracking monthly. I repeat: It’s not enough to know that money is coming in. Founders almost always know what their MRR is, but you should also be tracking a multitude of other vital factors (like your committed MRR, your conversion rate from trials to paid customers, churn, the cost to acquire new customers, etc).
Don’t Wait Too Long to Hire
While it’s super common for bootstrappers to do everything in the business at first, one of the most common things I hear from founders is that they waited too long to make their first hire. You don’t need to bring on an expensive, full-time employee with benefits to have back up. A part-time freelancer to help out with critical, time-sensitive work can be very cost-effective, and will be a lifesaver if you catch the flu, or just want to take a day off. And since you already set up separate emails for your business functions, and saved all your passwords in a password manager, onboarding someone will be that much easier.
When I’m looking at a business as a buyer, I also place more value on a company that has an experienced team in place to carry on operations than one that’s being run by just the founder(s). Hire great people! They will pay dividends in the short-term and if/when you are ready to sell.
Embrace Remote Work
There’s no reason SaaS founders need to hire in their city or town, so take advantage of that fact and go remote from the beginning. It’s cheaper, you’ll have access to more talent, and you’ll have an easier time retaining good people. I see a lot of businesses who decide to go remote on their 5th or 6th hire, and that 5th or 6th person is always at a disadvantage, so do it right, and do it from the start.
Take Care with Your Contracts
You need contracts for anyone you hire, whether it’s a part-time freelancer, or a full-time employee. And if that freelancer or employee is a developer, you need to be sure you have a contract that transfers the IP of any code they touch back to the business (programmers own the copyright to their code by default, just like artists own the copyright to their work).
Do Your Future Self a Favor
Nothing I’ve outlined here is that difficult. In fact, it’s easy—as in, easy to do, but also easy to put off. But it’s these kinds of simple processes and habits that can easily make or break your business.
In the day-to-day, ignoring these tasks can mean you’re running your business with unnecessary risk and inefficiency. During a sale, they can have a big impact on your timeline, your valuation, and your transition.
A great mantra to keep in mind is this: "A great business to sell is a great business to own." All of these tips apply to both scenarios and will bring some calm and sanity to running your business regardless of whether you are thinking of selling or not.
Want more details on any or all of these steps, and why they matter all the time, plus how they can help you during a sale? We cover all of these business resiliency moves in more detail over on the SureSwift blog.
Do you have an exit or resilience plan for your business? Have your own advice to share? Leave a comment below and share your wisdom.