In Depth

4 rules to keep in mind when selling your startup

Disha Kathuria
21st Nov 2016
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There are many reasons why a startup positioned for a fairly good run in the sun could fail to traverse the whole course. For example, you might have a good idea, but you also know that getting funds for it will eventually become impossible. So, in order to preserve the efficacy of the idea, and sustain the hard work that’s gone into it, you might put your company up for grabs. Or maybe you have reached a point where stagnation has got you by the gut and the best thing that could happen to you right now is if your startup gets lucky in acquisition.

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Whatever your reason to seek acquisition, there are four ways that can put you in a buyer’s good books.

Make use of your market appeal

The people who wish to buy you out weren’t born yesterday. They are hawk-eyed, cold, vicious beings who know a good product when they see one. It’s a matter of great importance to most of them (not all) to lay their hands on an idea that has acquired a certain standing among the masses. If your product has a golden period to talk about, make sure it gets known to the bigger fish.

Know what sets your startup apart

From technology and employees to innovation and customer database, there are several reasons that make your company, but what makes it stand out is your core proficiency area. If you give the impression that your startup is ‘altogether a good idea’ without underlining in what specific capacity, you might be put down for being uncertain, ambiguous, and therefore, not worthy of consideration. Steve Little, a contributor for entrepreneur.com sums up the need for distinctness eloquently, “Just as you know why your customers buy your product, know why a specific company would buy your business and what you can do to maximize the perceived value of it.”

What’s your financial status?

According to Peter Lehrman, Founder and CEO of Axial, “The single most important factor to a buyer looking to acquire a company is that business's financials.” He further added, “Financial reports must be free of inconsistencies and speak to the soundness of the company.” Think of it as the absolute and complete declaration of your assets, or the lack thereof. Honesty continues to be a virtue for most buyers.

A satisfactory or growing customer database

It perks up a buyer’s interest in you if they know your company comes with a sizeable customer database. According to leading website Business Daily, “Larger number of customers creates a more valuable sale proposition for your business.” In short, a large customer database paints a pleasant picture of your company’s past and presents a secure future as well.

It’s the greatest irony of the digital age – selling a startup can prove more challenging that starting it. However, like all of the world’s greatest problems, this too has a simple solution – honesty, lucidity and effectiveness.

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