Second in a Series … Click Below to Review the First and Third
Business Owner! OK, maybe you’re one of the very few who started your business with the end in sight … a plan to sell at some point and manage the business toward that end right from the beginning.
You’re right. You probably didn’t and now you’re seriously considering the sale of the product of your life’s work – the business you’ve worked hard to build. So where to start? Planning is the first step with a laundry list of “to-dos”, which often begins with an acknowledgement that you are in the phase of getting ready to get ready.
So, let’s reach in with both hands and see how to unravel that ball of yarn called planning. We’ll start with an examination of your motivation … why do you want to sell your business? There are many reasons that others have shared and that you may find enlightening as you determine your selling drivers.
- Health: “My health is preventing me from running my business.” “My business is endangering my health.”
- Family: “My family relationships are threatened because of my commitments to the business.” “Ours is a family business and is causing problems among the owners, my relatives.”
- Partnership: “My partner and I can’t stand each other anymore.” “My partner and I are constantly in conflict over how the company should be run.”
- Retirement: “I’ve given the business all that I can. It’s time to retire my jersey.”
- Burnout: This is at the top of the list of reasons why businesses are sold. Running a small business is often stressful and burnout is common. Smart business owners deal with it before it can impact their businesses – and personal lives. Ask yourself these questions:
- Are you “up-and-at-em” each morning … anxious to meet your daily work challenges and victories … or has fatigue set in?
- Are you full of fresh ideas on how to enhance your enterprise, or too bored, worried or just plain disinterested?
- If you’re in a partnership, are you finding more and more areas of conflict and less and less common plans for the future of your company?
- If yours is a family business, does it now enhance your family relationships, or are your personal and home-lives suffering?
- Does your business support your personal and professional objectives in the next 2 to 5 years?
For Your Own Good Reasons … You’ve Decided to Sell
You’ve spent considerable time, perhaps decades, realizing your vision of the business you created. And now you’re at the enviable, yet frightening, crossroads of what to do next. Do you continue to grow your enterprise, pass it on to your offspring or prep it for sale?
By the way, it’s predictably typical for business owners like you to have “next step” concerns. Most likely you can relate to some, or all questions we hear voiced over and over by entrepreneurs who have reached the point of considering how to proceed when it appears time to close the last chapter of being actively engaged in their businesses.
- Am I ready to sell … financially and emotionally?
- How much is my business worth?
- Who do I turn to for guidance?
Financial and Emotional Readiness
Now these are two powerful issues to wrestle with!
On the financial side, have you thought through what sales price will satisfy your financial needs? Keep in mind that the value of your company is what a qualified buyer is willing to pay, not what you would like to walk away with from the closing table.
There are solid financial numbers that will help determine the asset value of your company. Equally important is the human element … meaning, are you essential to the continued success of the enterprise? More on that in a bit
Emotional readiness is something that only you will be able to judge. Yes, it will take significant soul searching, ideally by engaging the help of an objective third-party with proven success in helping business owners face up to this critical question. Sometimes letting-go of an effort that has been all-consuming may be borderline traumatic. That means knowing specifically your plan for “life after entrepreneurship”.
How Much is My Business Worth?
There are objective and subjective components to the answer to that question. Objectively, assuming your books and records are up to date, a full-service business advisory/broker resource will give you an accurate and affordable financial assessment of the value of your company
Subjective appraisal elements are more complex as there are judgment calls that need to be made as well as “clean-up, paint-up, fix-up” issues to be dealt with. The number one subjective issue is whether your company is a viable, profitable entity without you, the current owner, on board. Said another way, the more indispensable you are to the company’s success translates to less perceived value to potential buyers.
We’ve covered a lot of ground and you may be left with the feeling that all of this is somewhat overwhelming. Not to worry … that’s a typical reaction which mellows out when you know that there is help available.
That’s where we come in … to help you decide on the best exit-strategy via sale or succession planning. You and your business are unique. Together, we will work with you and deliver action-oriented business advice to maximize your company’s value and promote its sale through our local and national network of qualified buyers.
We will help! Just give us a call or drop an email. We’ll respond promptly.
Click Here: Access more insight to prepare your business for sale and enjoy peak sale value.
Note: Be sure to check out our next issue for the continuing installment on Planning to sell your business.