When speaking with business owners I ask what they really want from their blood, sweat and tears. The often long hours, financial risk and stress that comes from running a business.
Many say they want to be in position to eventually sell the business for a decent sum.
But ask any reputable business broker who’ll tell you it’s actually much harder than it appears. And it takes much longer than you might think.
A fundamental question is what do you really have to sell?
Broadly there are two categories. You can sell your IP or you sell a running, profitable business. Preferably a combination of both.
One of our clients, a very successful financial planning firm did exactly this. His mindset was “one day I’ll want to sell” so he was a stickler for systems which meant he set his business up with a “memorandum of sale” from the get go. This detailed his financial position, client spread, funds under management, growth potential etc.
He updated it every year.
When he sold his business, he got much higher figure than others with equivalent businesses.
Another client thought he’d never be able to sell his niche production business. We’d worked with him on his marketing, sales and delivery systems. To his surprise someone came along and wanted to buy him out for much more than he’d thought he could sell the business for.
The key to a successful exit is to put in place the systems that help you move “beyond” your business, where you’re no longer the key person from the word go.
That takes a particular mindset first and then the discipline to implement the strategies involved.
A major mistake I’ve seen over the years is owners thinking they have to be the font of all knowledge and “no one can do this better than me”.
They think they’re indispensable. My comment is, “The graveyard is full of people who thought they were.” Harsh, I know, but it’s the truth.
Sometimes we need to put our egos in our pockets.
I tell my clients, “Hire people better than you in different areas”. That’s the only way you can delegate and elevate yourself so you can focus on higher value thinking and strategy.
Only when the business can successfully run without your constant involvement, will it be an attractive purchase for a good price.
Having said that, everything starts with leadership. Yours!
You need to decide what you want and when you want it by. Then put in place the frameworks and steps to achieve it. Which sounds simple in theory, but often quite difficult in practice. Especially if you have no one to turn to, to bounce ideas, to share the mental load.
Given this we work with clients in a number of ways.
Our overarching programs focus on enabling you to run a better business, have a bigger impact and enjoy a good life. However no business can grow without clients. So we also offer programs to help you develop and implement a sales system which predictably attracts and converts a steady stream of high quality profitable clients.
If you’d like my help setting up your business to eventually sell, give me a hoy. We’ll determine where you’re at and what steps you need to implement going forward.