Preparing your startup for an exit? Here are 7 things you should do

You have a startup. Chances are you will raise some decent cash because your idea is that good. You know it’s only a matter of time before you’re ready to sell it off to the highest bidder.

That’s great. We are here to prepare you for that moment. Just because your company is great and the technology is amazing doesn’t mean the big guns will come calling. Sometimes no matter how great the startup, it escapes the notice of the buyers. More often than not, you have to go find the buyers.

The truth is, businesses are acquired if they add value to the buyer. Their staff or technology will either boost current revenue, or they’re buying a profitable businesses to open a new revenue stream. If your business can do that then chances are you will be courted.

So if you are ready for wooing or actively seeking to be wooed, we have some tips to help you get ready for that exit strategy. Allons-y!

Does the market need you?
It is quite easy to get carried away when you are building something you care about. If you want to sell your startup to a bigger player in the same market, it is critical to make sure the market needs your solution. If your unique value proposition isn’t all that unique, as in anyone can clone it with a little know-how, then you are in trouble. Your business needs to meet a critical market need to make it desirable.

Sound business model
If you want to exit your business, you need to show that it is not only profitable, but it will continue to be profitable. No business will buy a company that will lose them money unless they are only buying for your staff or technology, re-appropriating it. Having a solid business model gives a negotiating edge. It shows the buyers that you mean business and not only is your technology valuable but you understand perfectly how to monetise it. Get your business model right.

Talented and dedicated team
Sometimes a big business will buy up a company just for its tech and leave the people who have worked hard to build it in the dust. Sometimes it won’t. Having a talented and dedicated team goes a long in convincing a company to buy your little company. A talented and dedicated team that will work the extra long hours to make sure your company is at the top of its game and meeting the demands of investors, is important. Having the team that began the journey still with you when you exit shows that it’s a worthwhile investment.

Cutting edge technology
Cutting edge technology is important, it makes it less difficult to exit. If your business is a clone of another business then there is more competition there. Sure, Groupon may buy you if you build a clone in an area the company hasn’t gotten to yet, however ten other people have the same idea. Also if you are going to build a clone and hope to be bought out, build something worthwhile. You cannot build a Facebook clone for Africa and expect Facebook to acquire you. Cutting edge technology, something unique with a good value proposition.

One for the masses?
Though niche is good some of the time, it’s always good to build something that appeals to the masses. You have to ask yourself if your product can be sold to any industry. Does it solve problems that pretty much anyone can relate to? Having a mass appeal can be critical to an exit strategy. If investors see that your product can be applied to any industry and can be sold to any business size, it ranks your company’s appeal higher.

Document everything!
The devil is in the details. Ask any startup that has exited and they will tell you, document everything. Having a paper trail of every decision, every expenditure and version of your technology is incredibly important. Documenting every aspect of your business makes the exit process much simpler and faster. Investors will ask for everything so make sure you have that and then some to show.

Think ahead
When it comes to exiting work from a worse case scenario. A Middle Eastern investor once told me that all companies that want to exit for a good price should always prepare to be disappointed — that way reality won’t be so bad. He also advised that if you preempt everything you will never be caught by surprise but rather tip the negotiating scale to your side. So think ahead and attempt to preempt everything.