Where the BIG Money is With HighLevel (Nobody is Talking About This?!) #gohighlevel #highlevelcrm

Summary

This video offers key strategies for successfully selling a business. The speaker emphasizes focusing on a specific market, minimizing custom work, and standardizing services to boost profitability and appeal to buyers. Clean, consistent contracts are vital, and scaling the business before selling can significantly increase its value. The video also stresses the importance of packaging the business for sale in a way that maximizes perceived value, drawing multiple buyers into a competitive process. These lessons, drawn from personal experience, offer a roadmap to a successful business sale and maximizing financial return.

Takeaways

• 😀 Focus on dominating a specific market to build strong customer relationships and make your business more attractive to potential buyers.
• 😀 Avoid custom work, as it often leads to lower margins and higher maintenance, and focus on standardized service packages instead.
• 😀 Ensure all your customer contracts are consistent, legally sound, and reviewed by a lawyer to avoid liabilities and complications in the sale process.
• 😀 The larger your business, the more valuable it becomes. Hitting psychological revenue milestones can increase your sale price.
• 😀 Aim for $1 million in recurring revenue, as it significantly boosts the perceived value of your business to potential buyers.
• 😀 Understand that selling your business is a marketing process. Package it in a way that showcases its value and attracts multiple buyers.
• 😀 Create a competitive bidding process to increase demand and raise the price of your business by having multiple potential buyers involved.
• 😀 Avoid distractions from custom, one-off projects, as they can hinder the growth of standardized, scalable services.
• 😀 Build your business's size and stability over time to reduce buyer risk and increase its appeal when you're ready to sell.
• 😀 The more standardized and recurring your revenue model, the more attractive and valuable your business will be to potential buyers.
• 😀 Present your business as a luxury product by designing a thoughtful and compelling sales process to maximize its value.

Q & A

What is the main reason for buying an existing business instead of starting one from scratch?

The main reason is to acquire existing customers and relationships. By purchasing a business, you save time and effort that would otherwise be spent building relationships from the ground up.

Why should agencies avoid custom work, such as time and talent projects, when building a business for sale?

Custom work can inflate the top line of revenue but often has low margins, is harder to sell, and requires more overhead and staff to manage. Buyers prefer businesses with standardized, recurring revenue streams rather than those relying on custom services.

What role do clean contracts play in preparing a business for sale?

Clean, standardized contracts are crucial for reducing risk. They ensure that all customer agreements are consistent and legally sound, which is attractive to potential buyers. Sloppy or inconsistent contracts could lead to the need for renegotiation, which could harm customer relationships.

Why is it important to grow a business before selling it?

Larger businesses are perceived as less risky by buyers, and there are psychological milestones (e.g., $1 million in recurring revenue) that can significantly increase the value of a business. Reaching these milestones can make the business more attractive and improve the sale price.

How do psychological milestones affect the sale price of a business?

As a business hits certain milestones, like $1 million or $10 million in revenue, the perceived confidence from buyers increases, leading to better purchase multiples. This means that a business can be sold for a higher price once it crosses these thresholds.

What is the significance of recurring revenue when preparing a business for sale?

Recurring revenue is highly valued by buyers because it provides stability and predictability. It reduces the perceived risk of the business and is much more attractive than one-time sales or custom projects.

Why is it necessary to understand the marketing aspect of selling a business?

Selling a business is a marketing process, and everything about the business’s presentation matters. By packaging the business well, creating competition among potential buyers, and having a clear sales process, you can significantly increase the business's perceived value and maximize the sale price.

What can be learned from how investment bankers sell businesses?

Investment bankers package businesses neatly, ensuring financials are tight and creating a clear sales process. They also engage multiple potential buyers, driving competition, which ultimately increases the value of the business being sold.

What are some ways to increase the perceived value of a business when selling?

Increasing perceived value can be achieved by ensuring clean contracts, focusing on standardized services, reaching key revenue milestones, and creating a competitive market through multiple potential buyers.

What is the risk of having custom contracts with different terms for each customer?

Having custom contracts for each customer introduces the risk that buyers will have to renegotiate terms, which could lead to customers re-evaluating their relationship with the business. This uncertainty is undesirable for buyers.