My clients always ask me how to increase their small business’ value and honestly this is where I spend a majority of my time helping you when you’re preparing to exit. Driving more value helps to increase the likelihood your business will sell so that your business is one of the 13% that successfully transacts. (Bonus: increasing your business’ value also brings you more money from your exit.)
So where do you start?
Put yourself in a business buyer’s shoes: think about what would be important to them and what would cause them to pay more money for your business.
We've all heard it said, "it is lonely at the top". And that is so true for many of today's business leaders.
As a modern business leader you are responsible for all.the.things. Making sales, increasing profitability, staying healthy, retaining top talent, giving back to the community, spending QT with your family, the list goes on.
The problem is that this is that it is A LOT to be responsible for; I'd even argue that it is TOO MUCH for one leader to be responsible for.
Let's take a quick look at the main points to consider if you're beginner considering your options for a small business exit. He said, "the reason you exit a business is not the same reason you start a business." And that really resonated for me because I'd never taken the time to really consider the difference between the two. And if you're like most small business owners I work with, maybe you haven't considered it either.
Chances are if you're considering exiting your business, this is a relatively new concept for you. You've spent many years working in your business, working on your business, hiring, firing, and putting out fires. You always envisioned that you'd work forever, right? And now, something's changed and you want to know how to get off this darn merry-go-round! Right?
The problem for most business owners who've decided now is the time is exit, is they've been singularly focused on the easiest and most efficient ways to run a profitable business. They have spent little to no time considering the factors and logistics involved with selling (and transferring) a successful business to a new owner.
It doesn't take a rocket scientist to identify the root of this problem. Simply put, small business owners rarely have the bandwidth to plan that far in advance. And frankly, small business ownership is a leadership role that's constantly evolving and demands 200% of your time and attention. Finding balance between working ON your business versus IN your business continues to be a challenge for many, if not all, small business owners. And so, we put off exit planning until there is no other choice.
If this describes you, you are not alone. I want to give you hope by reminding you there are resources, tools, and advisors that can make these next steps easier (and more profitable) for you.
Let's take a quick look at the main points to consider if you're a beginner considering your options for a small business exit.
Full disclosure, even I didn't know this was a thing until a few years ago — and I even purchased an existing business and still didn't know that businesses were "transacted" between buyer and seller.
Problem: I propose that not many business leaders are aware of this uber-specific niche strategy for a variety of reasons but mostly because so few small businesses are
C. Matched with a team that can successfully market and transact the business.
It is for the above 3 reasons that most small business owners simply go out of business when they're ready to exit instead of turning their hard work into a cash payment.
Finding a qualified buyer is harder than finding a needle in a haystack.
And, for buyers, finding a profitable, sale-able business they can buy immediately is just as hard.
So, when small business leaders are first introduced to my work as a business broker they usually ask one of the following three questions.
1. What's my business worth?
2. Can you sell my business?
3. So, you're telling me I can buy a business?
In 2020 I celebrated ten years as a self employed business owner. It was one of the highlights of my year.
In 2010 I was presented with an opportunity to "buy" an "income stream" from an "established, profitable, small lifestyle business" and I jumped at the chance! Even though I had no idea at the time that I was what I was doing.
At the time, if you would have asked me what I was doing, I would have said, "I am using my life savings to take a gamble on this "thing" that's supposed to pay me a modest living while I run it remotely from a beach in Mexico."
Immediately followed by, "Am I freaking nuts?!"
For your information, I purchased a salvage grocery brokerage business from my boyfriend (now husband, who started it with his ex wife. Hey, reality is stranger than fiction. I can't make this up!)
I bought and sold semi-truckloads of damaged and outdated groceries from a warehouse in Houston and sold them to "Mom and Pop" retail grocery stores through out the southwestern United States.
It was one of the best decisions I've ever made in my life and definitely one of my best business investments.
Along the way, I learned A LOT, mostly the hard way. Meh, that's just who I am and how I learn = experimenting.
And today I'm going to pull back the curtain on some of the things I wish I had known when I started way back then. Maybe one of these will resonate with you and will help you steer clear of some of the disappointments and heartbreak I found on my path.