Selling Your Business – The Dream
After years of building your business from scratch to a sizable asset, probably your biggest financial asset, you wake up tomorrow and decide it’s time to sell. You look forward and envisage that in 6 months you will taking your long-suffering family on that holiday of a lifetime, having sold your business for several million pounds. You’ve handed over the keys and never looked back.
In this fairy tale scenario, the business model is perfect with high margins and steady overheads. Consistent positive cash flows allows you to invest in the on-going growth and development of the business, your employees and yourself.
You are focused on strategy and supporting the leadership. Your team are focused on delivery and know exactly what they need to do, when they need to do it AND, most importantly, are empowered to get on with it. Truth is the business doesn’t really need you at all.
You’re there because you’ve the passion to drive the business onwards to greater success. Every day is a new opportunity to serve your customers to enable them to have a better life. You’d still do it even if you were not being paid.
Do you recognize your business in this story
Selling A Business – The Reality
Building a business is hard. It’s demanding on a physical, emotional and financial level. The stories that get into the press and magazines are of the successes, glossing over the tough road travelled to get there.
At the beginning, it’s all hands to the pump just getting off the ground. Small victories are celebrated, like your first customer signing up and the first payment going into the bank. Then the day to day of running a business takes over and the frantic stage of the business is in full flow. Well intentioned thoughts of getting paperwork in order are put to one side for a day when you have the time to think about it. You’ve thought about the shareholder agreement but, as you are all getting on, what’s the rush?
As you get a bit bigger and need staff, you take on your first employees. You find people who can do lots of things effectively in a small business. This includes a “capability jane” who manages to keep a lot of plates spinning and never letting one drop. The first members of your team work in parallel with you, deferring all decision making to you. They know what to do for the most part but anything outside of the normal is handled by you.
As you get more customers, you get more staff and more issues. Everyday there is a fire to put out, a query to answer or a problem to solve. Not every customer is getting the same experience. It becomes a bit hit and miss depending on who is handling each customer or prospect. There is a golden thread of your company culture running through the business, but it isn’t consistent.
Years go by. You are in the daily cycle of reacting, which means you aren’t leading. Your energy and passion dips because you aren’t doing what you hoped you would be. Some days you dread going into the business because you don’t know what you are going to deal with. All your plans at the beginning of the year, that didn’t get written down but are in your head, are not getting done.
No one else knows what the long-term plans are so only you can direct the business.
You are tired.
Selling becomes attractive, especially when you hear from one of your business owning friends of his business sale.
He’s now millions the richer and free to get on with the next phase of his life. He’s got new ideas of exciting new business opportunities that he can invest in while still looking after his family, private schools for the children and holidays to exotic places. If he can do it, maybe it’s time you did too?
You’ve an idea of a number that you think your business is worth. It’s a big number and it feels good because it represents the years of sacrifice you’ve made. The long hours, not being paid in the early days, struggling to get new customers and keep existing ones. Coping with the various dramas of employing people – sometimes the wrong people, who take ages to get rid of. It’s compensation for the missed family time, nativity plays, sports days and parent evenings. It’s a reward to your spouse who’s made sure everything in your home life has been covered in your absence and been patient on the holidays where you’ve been glued to your phone.
But do you really know how much your business is worth to someone else?
The truth is no one cares about any of those things when they are looking at buying your business. They care about return on investment. They want a business that has as little risk as possible, that generates net positive cash flow and is full of people who know what to do in their designated roles. They are looking for certainty, consistency and clarity. They measure this against their own risk appetite and the criteria they set for their investment plans.
In short, they are interested in how this business is going to serve their needs.
The better shape your business is in, the easier it is to find a buyer AND complete the sale process. Selling a business is about more than just the profitability – that’s just the start!
Are you ready to sell? Click here to contact Christine by email alternatively you can book a call with the Business Mentor of the Year 2020, author and speaker. Who helps business founders get their businesses exit ready so they can enjoy a happier, richer future. She saves them THOUSANDS and increases the value of their businesses by MILLIONS.