6 steps to make sure your business is worth buying
The top goal of business owners we work with want to get maximum value from it at sale so they can fund their retirement
Logically they understand that having an exit strategy is important for them and their business.
But practically it is a very different story!
...so why do so few owners, even though statistics show that they won’t be able to sell their businesses when they’re ready, not take these steps to create a solid exit strategy?
My approach to working with business owners
I want to make sure you aren't left with a business that is worth far less than you hoped or you cannot sell.
90% of business owners have little to no exit planning in place, even though the business makes up 80% of their current wealth.
Sure if you are 10-15 years out from retirement it is hard to prioritise. But why fix on such an arbitrary figure?
Your business should always be for sale at the right price.
Your ambition should define your business’ value growth strategy.
Plenty more unlikely projects have achieved their goal in far less time than 10 years!
An estimated 4.5 million firms representing more than $10 trillion in business value will try and exit over the next decade or so, but commentators predict that only 30 percent of businesses that go to market end up selling.
That is 3.1 million businesses that end up being wound down or sold for a figure that does not get anywhere near to compensating the founder for the lifelong effort and sacrifice they have made or the “dream exit” number they had targeted.
The 6 steps to make so that your business isn't worth far less than you hoped...or you cannot sell
1. Think about an exit plan even if you “believe” you won’t sell until a number of years in the future. What would you like to sell the business for. You do not need to have gone to business school to adopt high value growth strategies that can quickly build revenues.
2. Get a valuation for the business, know how much you are worth today. What is your starting point? Business owners often estimate the business’s value way above the estimates of financial experts as they are using incorrect valuation criteria.
3. Do your research. Speak to a professional team who can help assess your situation and work with you on a strategy to deliver the growth you need and benefit from compounding exit multiples.
4. Get creative about your post business lifestyle. How much money do you need to fund it? What size would the business need to be at exit to provide you with the funds to finance this. What after-tax income will you need to support your lifestyle?
5. If you have a partner, share what you both want to achieve.
6. Think about management succession, one of the key factors to selling the business for a high amount is the degree to which it is a business that you own as opposed to complete reliance. Who can continue to drive profitable products and services without your involvement.
Preserving value in your business
My partner and I have years of experience in finding and building value in businesses before they go to market.
For a free initial consultation, click on the "Contact Me" link in the footer and leave a message.