When Are You Leaving Your Business?

“Expect the best, prepare for the worst, capitalise on what comes.” Zig Ziglar

The Business Owners 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 be 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 flow 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 recognise your business in this story?

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. Every day 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 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!

If you recognise yourself in either of the two scenarios, then you are in the right place!
For motivated business founders, the route to exit is often seen as limited to selling to another company, trying to handover to the next generation or simply closing the doors having bled enough money out of it while it is still running. There are so many more options, and each option is not mutually exclusive to others. The harsh reality for many of business owners is they either:
• Stay in the weeds of daily operations and never get to plan what needs to happen to allow them to sell – leaving them with fewer choices (sometimes no choice at all)
• Tell themselves “I am never leaving this business” – which is sticking their head in the sand because 100% of business owners DO leave their businesses; no one is immortal
• Hope for an offer to randomly land and then let the buyer take the lead because they don’t know what the process is and how to prepare fully. Often giving away a lot of value that they could have kept for themselves.

Too many great businesses are floundering in mediocrity through a lack of knowledge as to what makes a great business. Too many business owners reduce the value of their business by working long hours and keeping their business reliant on themselves. Significant value and potential is being lost to the UK economy because of poor business transfers between one generation and the next.

Why am I writing about this?

The one thing I understand is the problems that businesses and their founders experience when they are trying to get the value from their lifetime of work. Having built my own companies from scratch and come to the rescue of businesses that are on their knees (the owners are usually literally on them and desperate to extract the value they’ve put in!), I know what it takes to get from unsaleable to exit success AND how businesses get exit ready in the first place. If you want to benefit from the value locked in your business, the best thing to do is to start thinking about what it is YOU as the owner want out of your business. If you are just starting out, beginning with the end in mind is a great place to start. It is much easier, cheaper, and quicker to plan successful exit options from the start.

If you are already a significant way along your business journey, now is a good time to take a deep breath and think about what needs to happen for you and your family to benefit from all the value you’ve built. Now is always a good time to think about “what next?” and “what if?” No one knows what’s going to happen tomorrow but being prepared for the most common likelihoods means the assets you’ve been building over your lifetime are protected, and your family are looked after. It just takes a bit of planning and preparation. That said it is not easy, it is still hard work

When I started writing my book, SELL IT, I kept in mind an old colleague from 20+ years ago who set me off on my mission to improve businesses. To protect the privacy of his family, let’s call him Trevor (he is a real person). Trevor had left school at 17 because he’d got his girlfriend pregnant and “did the right thing” and married her (it was the early 70s). He struggled through a couple of jobs before realizing that he could set up on his own. He started building a product in his garage when he was 24.

By the time he was 35, his business had moved into new premises and Trevor was employing 20 people. He’d also brought in a business partner to get the business growing and take the pressure off himself as being the only decision maker. Life was pretty good, he now had 3 children, a bigger house, and more outgoings. Roll forward another decade and Trevor met the love of his life – and decided to make a massive life change. He left his wife and started divorce proceedings. He bought a new house, solely in his own name. He started preparing to marry his new lady. It all looked like a bright new future in a new life. And he started to think about how he could spend less time at work in the business.

Trevor did not have a will. Or a shareholder agreement with his business partner. In fact, they’d been so busy building the business that they hadn’t really thought about how they would protect the value they were building. They were both heads down, getting on with keeping the wheels turning of what was now a £10m turnover enterprise.

Trevor was still a big part of the business and managed ALL the customer relationships. His business partner was the back-office guy and kept the wheels of the operation in motion. He was also a minority shareholder and had limited voting rights but that was ok because of the verbal agreement that he had with Trevor about the future of the business.

While Trevor was making the new house ready for his new wife, and he was still legally married to his first wife, he fell off a ladder. This triggered a devastating chain of events. Sadly, Trevor died. With no will, his estate transferred to his not-quite-ex-wife, including the house he bought with the intention of living with his new lady. His embittered wife decided she wanted to become involved in the business despite knowing nothing about it. The shareholding transferred to her and gave her voting rights and the right to appoint directors.

With no clear instruction this allowed her to start spending company funds on all sorts of activities that didn’t add value to the business. She decided to take over sales and marketing. She crushed the spirit of the team and they started to leave. It was a disaster. Within 2 years the business was closed, and a significant amount of the value lost – as well as nearly 100 jobs.
How do you increase your opportunities for successfully protecting and extracting the value of your business?

My book shows you a tried and tested framework – S.E.L.L.I.T. – showing you options and “what needs to happen” so that you can do the right things in your business to get a richer, happier future. Often, it’s doing less that allows both you and your business to thrive. Each stage of the process allows you to plan, review and decide on actions that have a direct impact on the value of your business without wasting precious time and cash. You’ll learn how to add value and enjoy the process and get more value along the way. Life is hard enough without having the extra pressure of learning how to sell a business effectively when you don’t have the experience or knowledge – or the time to learn.

SELL IT takes the pressure off by showing you what you need to pay attention to BEFORE you must leave your business! It is much better to be prepared and be proactive than reacting to circumstances. You’ll be less stressed, more productive and a much better leader of your business as a result – and your family and friends will thank you for it too!

So if you are thinking about getting Exit Ready, try the 3 minute, 15 question quiz that lets you know where you are right now.  Then you’ll get a short report showing what you need to work on as a priority.

Here’s the link

 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.