Written by: Christine Nicholson, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
As Entrepreneurs, the dream of building something bigger than a job drives us to take more risks and create a business that has long-lasting value. Any sacrifices are justified by the potential rewards if the business is eventually sold. But there is another horrifying statistic that many business owners turn a blind eye to:
80% of businesses that are attempting to sell do not get sold.
The sad situation is that many business owners work way more hours than they planned. They are so busy running the business they can't imagine how they'll ever get out of the day-to-day. Let alone how they'll get the value out of their business effectively. If this is you, it’s time to think about some Exit Readiness Planning.
The headlines of a decent plan are:
Get out of the day to day
Plan a transfer of control
Get ready for a transfer of ownership
If your business needs you in the day-to-day, you are putting it at risk of being worth less than it should be. Not every business survives the loss of a business owner (no matter how or when the owner leaves), and 100% of business owners leave their businesses. Those businesses that don’t have an Exit Readiness Plan don't survive and a lifetime of value is then lost.
If you have an actionable plan for “handing over” it’s the start of making your business worth more and have a longer legacy – no matter when you leave, or what the circumstances are. Having a plan and IMPLEMENTING IT generates real value that you can extract to fund a better retirement AND leave a thriving business for the next owners.
A shocking statistic is that MORE THAN HALF of all business owners leave their business before they are ready in a response to either an unexpected offer or an unplanned event such as death, disability, disease or divorce. In these circumstances, the value of your business will be affected unless it is fully prepared. Business owners are forced to respond to these events on the back foot.
And if you are reacting, you aren’t leading (and losing!)
Reacting means you (or your family if you aren’t around) will get less from your business than it is otherwise worth. If you are selling your business proactively, you are likely only to go through the process once. Do. You have any idea what to expect? The process of selling a business is often shrouded in mystery. And it should not be.
Preparation for the successful sale of a business starts year in advance. Understanding the process and what the buyer is looking for and how it affects the value of the business means the seller can get on the front foot and be ready for the sale.
Preparing for the journey to sell a business means you’ll get more from all the hard work you’ve put into your business. Being ready for a transaction has the added benefit of having a business that is easier to run, more enjoyable to own and less stressful for everyone, including yourself.
Your business will also be worth more!
If you knew your business was going to close its doors when you retire with little or no capital value, would you be making the same decisions today?
How much is your business worth today?
How do you know? And what can you do to change it?
And if knowing your business value is a key part of being prepared, then why are only 2% of business owners aware of what their realistic business value is right now?
Learning what pre-sale preparation is required ensures that you get the best value for your lifetime of work. When you understand the critical path that business owners follow when successfully selling their businesses, you can start to get ready. Knowing what every step of the sale process is will mean there are no surprises and you’ll be equipped with more knowledge and understanding. And the result of this knowledge? A more enjoyable experience for you, your business and all the stakeholders.
That said it is not easy. It is still hard work.
Having built my own companies and come to the rescue of businesses that are on their knees, I know what it takes to get from unsaleable to exit success AND how businesses get exit ready in the first place. 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 likelihood 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.
The good news is you can start with some simple, quick wins today that cost nothing apart from a little time and thinking.
Building an Exit Readiness Plan is relatively simple but isn’t necessarily easy. You have so many options sometimes it can be difficult to choose. The hardest part is getting started.
If you want to get ready to sell, it’s not just about the business. It’s about your own beliefs and approach. More business sales fail because the seller is just not ready than any other reason. Here’s 6 essential questions:
| Pre-Sale “Self” Assessment | |
1 | Why am I selling? | |
2 | Is it the right time? (for me, for the business?) | |
3 | Am I ready? | |
4 | Is the business in the best shape to sell? | |
5 | What’s it worth?
| |
6 | Who are the potential buyers? | |
Christine Nicholson has over 25 years of hands-on experience working with companies who are looking at Exit Planning. She is Business Mentor of the Year 2022.
Christine Nicholson, Executive Contributor Brainz Magazine
I am Christine Nicholson, an author, speaker, and award-winning Professional Business Mentor who works with multi-million turnover business owners of technology, engineering, or product/services businesses.
I'm UK Business Mentor of the Year 2021 and a Global Top 50 Woman in Accounting. I've appeared on BBC talking about business!
0333 567 8011
