Many people change occupations every eight years.
Many people find it fun and exciting to start and grow a business. The challenges of figuring out to grow the business cause a real rush of adrenalin. However, once the business has established itself and the systems and staff are in place, the owner’s role becomes more of routine management, rather than the entrepreneurial creative mode when the business is growing. For many, this is when the fun is gone. The enthusiasm that built the business slowly melts away, which will affect current and future growth – and profits.
Other times, there is just a craving to spend more time with the grandchildren or on other interests, such as a cross-county trip on the Harley or playing more golf. The result is that the owner finds him- or herself wanting to be somewhere else.
Once a business owner feels that the business is no longer fun or a challenge and is, in fact, work, employees can sense this lack of enthusiasm and it causes a ripple effect, little by little.
This is the time to start grooming your business to be sold, and to establish a plan for that moment. The mission is to get the maximum value for the business you have built. Many times, doing what is right for your employees and customers who made it all possible is just as important. A few items that should be on your “to do list”:
- Clean up your accounting records, to show the maximum profit without having to explain what are called “add-backs” for personal expenses that have been run through the business.
- Get an estimate of what the business is worth, so you have a reality check.
- Look at your customer concentration; if any one customer represents more the 10% of total volume, this could be an issue. Establish a plan to correct this now.
- Aim to ensure that sales and profits are steady or growing. This is very important. If there is a downward trend, it could cause problems in getting long-term financing and it will surely affect the value of the business.
- Make sure the business is not “you,” but rather your staff.
- Have middle management in place to help transition the business to new ownership.
It is smart to start working on your exit plan a year or two in advance. A professional intermediary can make suggestions to help you with what can be done to get ready.
If you would like a confidential conversation about how to prepare, whether as a seller or a buyer, please contact me on my cell, 954-579-4687, or by e-mail at firstname.lastname@example.org. My LinkedIn profile is: http://www.linkedin.com/in/dolansales.