Over the last couple of years you've kicked some tires, read a few articles or books, spoke to a few friends and maybe some professionals with experience in selling businesses. Then you put it all on hold because selling your business was never a serious consideration. After all you were still young.
If you read the business press today, it is shocking the number of Boomer Aged Business Owners with no real plan to sell their business. In Canada it's estimated there are 550,000 Boomer Aged Business Owners.
1. Over 75% of you plan to sell within the next 10 years. That's a lot of competition.
2. Less than 10% of you have a team, formal exit or succession plan in place.
3. Over 82% expect the sale of your business to fund your retirement. That's a lot of pressure.
As I said earlier, over the years I've worked directly with hundreds of owners of small and medium-sized businesses, like yourself. And spoken with many more. It is disturbing to realize the number of entrepreneurs who don't have a real exit strategy in place. There is no thought out plan to sell or transition your business.
In addition there are a huge amount of business Owners willing to let your businesses go for well under what you could sell for. Mainly because you don't want to do the work to prepare the company for sale.
Or you've chosen to ride it out for a few more years, taking as much cash out of the business as you can and then plan to just close the doors with little or no thought for the negative impact on
employees, vendors and customers. Let's not forget our economy which is not even close to being ready to absorb the impact of hundreds of thousands of Owners shutting down over a concentrated period of time.
The other option being considered by Owners is to 'die with your boots on'. These are the Owners planning to work until you drop. A plan based on loving what you do, working is an economic necessity or you simply don't know what else to do with your time. Or whatever story you want to tell yourself.
In many cases, initially, you're taking business selling advice from your current lawyers and accountants. Which is great if the trusted advisers have experience buying and selling companies. Not so good if they don't.
You are letting your baby go for 2, 3 or 4 x EBITDA* based on a volume of sales well below what it could be. Increased sales, a reshuffling of people, improved marketing, better operations and financial controls could all help to increase EBITDA* and therefore garner a sale price 6+ X. Especially when your annual sales break the magic $10,000,000 level. You could sell for far more than you have ever imagined was possible. It just requires some preparation.
*Commonly abbreviated as EBITDA, an accounting measure to calculate a company's net Earnings, Before Interest expenses, Taxes, Depreciation and Amortization are subtracted. Used as a proxy for a company's current operating profitability.
You could wait a few years and receive much more for your business. Anything done to increase the value of the business will help to make the company more desirable to a Buyer and valuable to you the Owner.
For years you considered improvements to your marketing, operations, finance and sales departments. Thought about enhancing technology, or even replacing staff. But you never followed thru.
Every SMB I've ever visited always included the obligatory tour. The Owner inevitably introduced his staff as: This is Jeff our Marketing Manager but he's not really a marketing person more a sales guy. Meet Susie our Controller, but she's really only qualified as a bookkeeper. Jan who doesn't get along with anyone but I keep her anyway. And my children who couldn't get a job elsewhere so they work here, etc.
Always one step below what they should be. No not the whole staff or you wouldn't have a thriving business. Just a few key players who help to keep you back or cause some frustration. Well now you may want to reconsider. The new Owner will be assessing your people and your judgement in people. They will be spotted and quickly. It will be held against you.
There are good ideas not acted on because they were an unnecessary expense or it was so much work you just didn't bother.
If you have an established business, consider returning to why you got into the business in the first place. Get in touch with what you were passionate about and determine how to get back to doing the things that you can’t wait to do each day.
There is no shortage of experienced folks to perform the functions you are not comfortable with or even qualified to do. Stop doing the stuff you hate and spend more time working on the business not in the business.
Increase your company value now. Visit www.SellYourBusiness4More.com