You have worked hard all of your life building up your business but now it is time to retire and enjoy the good life. If you do not have children who are interested or able to take over the business you will need to sell your business or develop a creative plan that will turn your business into an annuity. The process of selling your business can be difficult. It is essential before you talk to a business broker, or a business valuation company.
You have worked hard all of your life building up your business but now it is time to retire and enjoy the good life. If you do not have children who are interested or able to take over the business you will need to sell your business or develop a creative plan that will turn your business into an annuity. The process of selling your business can be difficult. It is essential before you talk to a business broker, or a business valuation company that you create a plan.
Without a strategic plan you may end up leaving money on the table. You should consider creating a strategic business plan three – five years before your desired exit.
Preparing your business for sale is very much like preparing your home for sale. If you fix the leaky basement and deal with the bad electrical before the agents come it is wise. When selling your house you also would update as much as possible, finish half done renovations and improve the curb appeal. A good purge, clean and house stager would usually increase your homes value. The same rule of thumb applies to your business. You don’t want agents talking amongst themselves about the leaky roof, or the cracks in the foundation. Fix what is wrong before you sell to maximize dollars.
For your business, ensure that you have a short term and long term strategic plan that includes, IT, Marketing, Sales and Human resources strategies. Ensure that the framework for your business is sound and be able to show that you are aware of Strengths, Weaknesses, Opportunities and threats that face your company.
If you have 3-5 years it is wise to execute the plan bringing in any talent that can help you to hone the strategic plan. This is like hiring someone to renovate your house before you list it to maximize the value in the market. Giving yourself time to drive results will lead to increase sales and improves the balance sheet. Prospective buyers usually look at the last three to five years of balance sheets.
One of the frustrations for company owners that are trying to sell their business is they are ready to get out of the grind, but they are not getting the price for the business they expected. DOS computers, old technology, manual processes, poor marketing efforts or ineffective staff scream for lowball offers and this does not reflect your blood sweat and tears. At this point frustrated owners are tired, or have checked out, they have waited a few too many years and poor health has become an issue. Business brokers and purchasers love these situations and will formulate prices on what your business is not doing instead of on a fantastic record.
Don’t let this happen to you. It is never too soon to create a succession plan and create a solid business strategy. By updating systems and methodologies, creating best practices, implementing strategic plans, hiring appropriate staff, documenting policies and procedures and having a healthy balance sheet with 3-5 years of track record you will optimize your price and sell your business efficiently and for the maximum price. At the very minimum have a solid plan and proper balance sheets before you enter into discussions with a valuation or business broker and don’t leave your well-deserved money on the table.
