It happens all the time. You’ve poured everything you have into your business. You work more than anyone in the company. You even work on vacation. Your customers love you. Your employees love you. Retention is high and turnover is low. The company is profitable and growing. Now, it’s time to sell the business, and all indicators point to premium value. All that hard work is about to pay off.
Then you get the news–your business is going to be difficult to sell. But why?
The answer–you.
I see it all too often. Otherwise great entrepreneurs making the same mistake, and killing the value of their business–or worse, making it un-sellable. Let’s walk through some common examples, so you know how to maximize the value of your business.
Your customers love you
Entrepreneurs are often great at building relationships, but if you are the primary interface with your customers, then what happens when you are no longer the owner? No one wants a business when the rainmaker is leaving.
You are the expert
Entrepreneurs thrive when they operate in their expertise, but if you are the genius behind the operation, then what happens when you are gone? If you haven’t built a strong team that is smarter and more capable than you, then you don’t really have anything so sell. On the other hand, a well-documented company with trained workers, is exactly what buyers are after.
You are the oil in the well-oiled machine
Some people are just great at building processes and procedures, managing projects, and keeping everything flowing efficiently. If you’ve built a process that runs without you, then expect a premium value. On the other hand, if it’s your great management that makes it run like clockwork, then you may be better off selling yourself, because your company may not be worth much without you.
You are the chief problem solver and decision maker
You take pride in always being available, working hard, even working on vacation, but the most valuable businesses are those where the owner can go on vacation for a month and their cell phone doesn’t even buzz.
If you can’t trust your staff to make decisions, a buyer won’t either, and the value of your business just declined.
Your employees love you
Company culture is important, loyalty is key, and a team that is “like family” can be very valuable. On the other hand, where does the loyalty reside? With the company and what it stands for? With the team? Or with you personally? If the latter, the buyer faces a sizable risk of acquiring a company whose loyalty lies with someone else.
You see the theme here, don’t you? It’s you. If the company is successful because you are a great sales person, everyone likes you, you’re a problem solver or you’re the brains behind the operation, then the company is not successful – you are. If you have built an infrastructure with efficient and effective procedures, and a first-class team of people who operate the business with vision, drive and loyalty, then you have something special, and buyers will pay a premium for it.
So, how do you maximize the value of your business? Build it so that it runs without you.
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