How To Sell Your Business Successfully
Most of my blog posts have focused on how to run a successful business. This week, let’s take a look at an important transition; how to move from your business to whatever the next step is in your life.
Say your business has been so successful, has given you an incredible life, supported your family, fulfilled your dreams, etc… and now maybe you’re ready to move on, but how do you get there?
At my core, my main motivator is to help people. And in the last few years, I have been able to add a new tool to my toolbox: exit strategies.
THE ISSUES WITH EXITING A COMPANY
I work with many business owners that have done a fantastic job of getting their business to where it is. Cash flows are good, customers are happy, and in general, the business is running well. The problem is then what?
Here are a couple common issues that come up when considering an exit strategy:
1. Owners are so good at their job that they become indispensable to the company. For them, vacations are rare, short and usually interrupted. Things don’t function as well as they should with their absence and in general, the owner is critical to the company’s success.
2. If there are children involved, they either a) don’t want to continue the family business or b) want to continue, but aren’t qualified. Trapped is a word that comes to mind for many owners. Running on that never ending hamster wheel, leaving little time or space to enjoy what they’ve earned from working so hard.
To deal with these issues, you must become aware of what your options are. Almost without fail, there are more options out there than you may know about.
Take these options, for instance:
• outright sales
• ESOPs (Employee Stock Option Plans)
• various types of gifting
Depending on the situation and condition of the company, all, some or none of these may be a good option.
They vary in factors such as:
• when the owner gets cash
• how much cash they get
• who controls the decisions, etc.
But the big question becomes: How can a business owner exit the company while it’s still in operation and growing, so that everyone involved wins?
THE ULTIMATE WIN-WIN PROPOSITION FOR BUYER & SELLER
The ultimate outcome is that the owner gets paid for his time and effort growing the business to this point, and the buyer gets a well operating company that is poised for growth and in turn, a return on his or her investment.
SO, HOW DO WE SELL OUR BUSINESS SUCCESSFULLY? WHAT ARE THE STEPS? HERE ARE A FEW:
1. Start talking to people that can help make this happen.
In the end, you will need accountants, attorneys and advisors.
2. Get your books in order.
Many businesses that are interested in selling have poor bookkeeping. Prepare for future conversations by investing the time to fix them now.
3. Prepare yourself mentally for the exit.
The business has been ‘your baby’ for years now. It may be time to let go a little and allow someone else’s input and contribution. Also, understand that every aspect of the company will be viewed under a microscope!
4. Start planning life after the sale.
What will you do with your time? How will you enjoy life? Getting a clear picture of this will help you make it through some of the challenges.
There is much more to the process than just these steps, and exiting doesn’t work for everyone and every business. But raising your awareness so that if and when the time comes for you, you know where to begin.