Build to Sell: What It Really Means and How to Start Today
When we started our first company, every mentor and advisor seemed to ask the same question: “What’s your exit strategy?” In other words, how do you plan on getting out of the business?
At the time, I thought it was kind of ridiculous to start thinking about that concept. Not only did it feel so far away and abstract, we were just trying to keep the lights on and figure things out one day at a time. Thinking about where we’d be in 5 or 10 years, let alone what we wanted out of life by then, felt impossible.
Looking back, it’s one of those lessons I wish had landed earlier.
Around our brokerage, we like to say: No one gets into business to stay in business forever. Sooner or later, you’re going to want to get out, and ideally, that happens before you're pulling up the covers on your deathbed so that you can enjoy some of the fruits of your labour.
When that day comes, you really only have three options:
Dissolve the company
Go public
Sell
Option 1 is common but leaves you with nothing. Option 2 is a moonshot unless you're in the unicorn building business. That leaves Option 3: Sell.
Whether it's a year from now or a decade, the majority of business owners eventually will want or need to sell. Maybe it's for retirement, a new venture, or just a change in lifestyle. Whatever the reason, the sad truth is many entrepreneurs don’t realize their business is a sellable asset or they don’t treat it like one.
If you’re running a profitable business, you’re sitting on equity. But turning that equity into cash requires groundwork. And the sooner you start, the better.
What Build to Sell Actually Means
So you’ve got a company and you want to build it to be sellable someday. But what does that actually mean?
At its core, "build to sell" means growing your business in a way that makes it attractive, transferable, and valuable to a future buyer.
Yes, some businesses are naturally more appealing to buyers than others. And sure, market conditions can swing valuations and M&A activity up or down. But regardless of the timing, there are some core tenets that determine whether your business is truly sellable. And spoiler: it’s not about having the slickest pitch deck.
Now, before you spiral into a panic about how far behind you are, let’s take a breath.
No business is perfect. There’s no magic checklist where hitting every item means a guaranteed sale. But the stronger you are in the key areas we’re about to cover, the easier it will be to attract real buyers and command a fair price.
On the flip side, if you're too weak in these areas, the buyer pool shrinks fast. As brokers, we often live in the land of “probablys” and “maybes,” and though we never say never, the hard truth is: businesses that miss the mark in these core areas probably won’t sell.
So let’s dig into each one of these and look at what kind of things you can be doing now to help optimize for a sale down the road.
The Core Principles of Building a Sellable Business
1. Profitable & Predictable
When we’re talking about small businesses, 90% of the time buyers are going to pay a price that’s based on a multiple of your profit. While buyers do purchase distressed businesses, you likely won’t get anywhere near a valuation that feels fair.
It may seem obvious, but in the small business world the more profitable and more stable you are the more attractive you are to buyers. Growth is good, but if your revenue and expenses are wildly different from year-to-year with big swings both up and down, buyers will have a hard time trusting what trends to follow and what the finances will look like under their ownership.
What Actions Can You Take Now
Beyond the obvious of just building the most successful and profitable business you can, keep track of your financials. If you have a big dip in revenue or one of your operational expenses increases drastically, keep track and document the reasons behind these changes. Expect that the buyers will question all of these.
The fewer decreases in revenue and profitability you have the better, but if they do happen, be ready to demonstrate the reasoning why and what the path to future growth could look like.
2. De-Risked
If there are any single points of failure, this could be a dealbreaker for a potential buyer. For example if one of your clients provides more than 30% of your annual revenue, that’s a massive risk for a buyer to stomach. Same goes if one employee holds all the operational knowledge and quits two weeks after closing. The new owner is hooped.
The reality in the small business world is that there are often single points of failure since we’re not talking about big operations and big teams. But the more you can derisk your operation the better. At minimum, have contingency plans to mitigate these risks.
What Actions Can You Take Now
Try to build a diversified client base and minimize the percentage of revenue that any single client provides if possible. At a minimum, try to ensure there are strong contracts in place with any major clients that provide some security that their business will continue for the future.
Diversify your suppliers and have backup suppliers if any of your major relationships goes south or they’re unable to provide your products or services.
Make sure any key employee knowledge is not locked in with just them. Whether it’s through sharing knowledge with you or another team member, or documenting all the systems and processes, there should be a contingency if anyone that holds key knowledge gets hit by a bus tomorrow.
3. Systematized Operations
Buyers LOVE it when you have all your systems and processes documented. If you’re going to focus on one thing, do this. Having documented SOPs (Standard Operating Procedures) can be the difference between having a sellable and unsellable business. SOPs provide a buyer some security that if you were to disappear overnight, there’s a guidebook that they can follow and ensure the business can continue running.
What Actions Can You Take Now
Start documenting your processes. That’s it. It’s time consuming and annoying to do, but trust me, when it comes time to sell, it will make a huge difference in the sales process. Most small businesses don’t do this and so if you’re in a competitive industry come to the table with a well-documented machine, you will be in a much stronger negotiating position.
Don’t overcomplicate it. Use Word docs or record yourself on Loom and AI tools can help turn that into a usable SOP.
4. Growth Potential
Sometimes our biggest weaknesses are actually our biggest strengths when it comes to selling a business. Maybe you haven’t invested in a digital marketing strategy or maybe there’s a new product line you know the business needs to introduce but you just don’t have the time or energy to execute. These untapped opportunities are often a key part of the narrative that gets buyers excited.
No one wants to buy a business that’s tapped out all its growth avenues. We always like to say that people “pay for the past but buy for the future”. There always has to be some potential upside for a buyer to execute on that goes beyond just the existing profits.
What Actions Can You Take Now
As you’re building and running your business, always keep in the back of your mind what growth strategies exist. These might be for you to execute on but as you get near the time when you would like to sell, keep a few more of these ideas in your back pocket to share with a buyer. Having some dry powder in the barrel can sometimes be what it takes to move a buyer to make a deal.
5. Clean Ownership & Books
This one is critical. Though it can encompass a lot, having messy books or legal documents is probably the most common reason for a small business deal to fail. If your financials require too many adjustments or your legal situation is unclear, buyers might walk away entirely. As a general rule, just do all the things you’re supposed to do as a business owner and stay on good terms with the government. Your team of professionals should be skilled at helping you achieve all of these.
What Actions Can You Take Now
Minimize the amount of expenses and revenue that are unrelated to your business operations shown on your financials.
Talk to your accountant every year and ensure that your financials are being set up and optimized for a potential future sale.
Get accountant prepared financial statements every year.
File and pay all your taxes.
Keep all your files and legal documents organized.
Keep your minute book up to date.
Ensure all legal issues are settled and documented.
6. Transferable
For our last principle, let’s look at owner dependence. This is a major factor, especially when dealing with small Main street businesses. More often than not, small businesses are owner dependent so that dependence is to be expected. But sometimes we see that an owner’s ego can sometimes get tied up in wanting to be essential to the business.
As an entrepreneur, I get it. You’re used to handling everything yourself, and it takes a long time to build the trust and train someone to do the job as well as you. It’s counterintuitive, but the goal is to make yourself useless to your business. The less essential you are to your business, the more valuable it becomes.
If you can take two months off and your business not only runs but grows, it’s instantly more sellable. If an owner has to work 80 hours a week just to keep the company going, not many buyers are going to want to sign on to that job. Two months of holiday is probably a stretch for most small business owners, use that as your north star as you grow your company.
What Actions Can You Take Now
Use the actions from all the other principles to build a systematized and scalable operation.
Check your ego at the door, and start strategizing on how you can fire yourself from the most jobs possible.
Building a Business Worth Selling
If you’ve made it this far, you’re already doing more than most business owners.
Building a sellable company isn’t about perfection, it’s about direction. You don’t need to overhaul your entire business overnight. You just need to start being intentional about making it stronger, more independent, and easier for someone else to step into.
Most owners wait too long to think about this. But the truth is, you’ll either sell your business, shut it down, or leave someone else to clean it up. So if you believe your business has value, and you want to protect that value, then start laying the groundwork now.
If you’re thinking about selling in the next few years, it’s worth taking stock of where you’re at. Start making small moves now. Your future self (and future buyer) will thank you.
