As much as we would like to sometimes, we just cannot change history.
As much as we would like to sometimes, we just cannot change history.Although, some business owners still try to turn the clock back!
What do I mean by that? Well, every day in business we are creating a history of the business’ performance – reflected in the numbers. Every single thing that happens in the business is there for everyone to see – including potential buyers of the business. And that’s why I keep emphasising to business owners “be aware of the history you are creating. Know your numbers!”
One of my mantras is “Keep your financials clean, up to date and the ‘right’ numbers going up!”
A business, like shares, is much more attractive when there is a history of the numbers going up! The most important numbers are ‘adjusted net profit’ to the owner, turnover, and gross profit. The longer they have been going up the better but at least over the last three years. Steady growth is preferred by most buyers not sudden increases or decreases. Consistency is very important and spread over a good diverse mix of clients. It can take years to get to this state.
One bad number can make a big difference in the value of a business and can put buyers off – big time! Many businesses I get to look at simply do not have a well constructed process for recording and reviewing the numbers. Want to know more? Attend one of my short workshops.
This is why every business owner who has any ambition at all to sell their business one day, and cash out with a good sale, needs to be planning and preparing their business ready for sale EVERY DAY. Build an asset not just a job for the owner.
A business that is ready for sale will be much easier to manage, run without the owner, be much more successful and will attract buyers. This is the situation you want to be in so that you can have options to sell for the price you want, when you want to. You should be in control of the whole process.
There are many more areas that need to be considered in addition to the numbers. For example how well you structure and record the numbers is also critical. Make it easy for a buyer (and yourself) to see what is happening in the business. Keep your eye on the ball all the time.
In future posts I’ll be covering the other areas but if you want to fast track your learning on the “business ready for sale front” consider attending one of my half day seminars on the topic. To get the details
When it comes time to make big decisions, to bounce ideas off people or have a focus group on a new product, that’s when it can feel very lonely for a lot of small business people. That is where I have found John Denton’s mentoring/business owners board (Bob) to be invaluable assistance. You are grouped with a wide variety of like-minded people who want to improve their business, willing to share their time and experience to potentially help you. The advice also comes un-biased with no strings attached, and sometimes it hurts! The fact that I have been a member for over 8 years and my business has improved each year is testament to the value of the group and the professionalism of John as a facilitator. I recommend the group unreservedly.
At some point every business owner exits their business!
business that’s ‘ready for sale’ is well worth keeping. Build your business as if you are going to keep it forever, but could sell it tomorrow.
Before you open your mouth in a meeting, or in a conversation with someone at work or socially, consider applying this triple filter first! This has been attributed to Socrates and goes something like this;
