Even if you are not looking to sell your business near term, the mindset, preparation and readiness are essential to the long-term success and value of a business. We have worked with dozens of companies preparing for a sale transaction, and many more trying to build long term value. The similarities between the two strategies are closer than one might think.

Here are a few key factors to consider.

1. First, what are the core elements a buyer will look at? Buyers will look at 3 or more years of financial statements, almost always by month. They will look at budgets and forecasts. They will review the quality of accounts receivable, inventory, equipment, and other assets. They will want to understand how the company generates cash, the stability of where sales and product supply come from and the strengths and weaknesses of the management team. And of course, they will look at where the growth prospects of the company will come from. In summary, what story does all this information say about the quality of the business overall? Can you produce this information? The answer may suggest opportunities within the business.

2. As a business owner, these pieces are essential regardless of any potential sale. What story is the business telling you? As an owner, look at your business through the lens of a buyer. Do your monthly trends make sense? Do they tell the real story? Is the business as profitable as it should be? If not, why? Are your forecasts consistently missing the mark? Does your business lack a handle on its inventory or fixed assets? Forget a sale, these are fundamental components that could be limiting the profitability and value of the business. If you were a buyer, would you buy your business? If the answer is no that suggests deeper issues for the business today. What has to be true for your answer to change to yes?

3. Buyers think long term. Business owners need to as well. No question, short term profits matter. Sales for the next month matter. But a regular examination of the impact of actions and decisions today on the business long term is often overlooked.

4. Many business owners are thinking about selling their business at some point down the road. To be clear, we would certainly not suggest having a full due diligence package ready at any point in time, as the sale process can be extensive with a litany of information being requested and reviewed. But focusing on the core aspects, with good processes and information quality, fulfilling information requests does not have to be a herculean task. And from experience, it can take businesses 2 to 3 times as long and cost 2 to 3 times as much when being reactive and trying to scramble as a potential sale comes into play. A little preparation goes a long way in addition to being a business best practice.

5. Sales happen when you are not planning on them. The market for acquisitions remains strong and is projected to stay that way for years to come. We have seen many instances of unsolicited offers to purchase companies. You never know when that opportunity might present itself, and given a big enough check, just about any business owner would consider a sale. On a more personal note, even if not actively looking for it, have you thought about what that minimum number would have to be to consider a sale?

6. There are many other external uses that could be applicable tomorrow. Whether seeking growth capital from a lender, raising capital from investors, or reaching the scale where reviewed or audited financial statements are sought, the core elements in a presentable format are going to be required in any of these instances.

Look and act the part. Get above the business and look down on it. What needs to change? For the majority of entrepreneurs, their business is their nest egg. Understand its value, examine its value and protect its value. While a sale may not materialize today, the value of a business and anything that can preserve and improve it should be a routine area of focus. Get ready. Stay ready.