The future is calling you, but what is it saying?

Let’s say you own a small or medium sized business. For the purposes of brevity, let’s call it an SME from now on. You’ve started it from scratch or bought it and have grown it a fair bit over the years.

You’re making a decent amount of money out of it and there are no real clouds on the horizon. Let’s also say that you’re 50+. You maintain good health and expect to for the forseeable future.

For all intents and purposes, this state of affairs could continue for maybe another 20 years. But, now is the time you should probably be looking at the future and starting to make some decisions. Why now?

Because things can happen unexpectedly and the more prepared you are, the better.

You’ve got so many options. You can run the business until the day you keel over, you can make it an option for family to take over, you can bring in an equity partner, you could bring in a young hot shot to work alongside you with the intent of a phased buyout or you could sell the business lock, stock and barrel.

Each of these scenarios carries a body of work, risk and potentially very different upside outcomes.

There are distinct advantages and disadvantages to being the owner/operator of a business. The advantages are that there is little to no barrier to decision making since you have your fingers on the pulse of everything.

The disadvantages are that after a business grows to a certain size and complexity, you may have actually become a handbrake on progress as you struggle to stay on top of everything. You may also have reached the limits of your understanding of a bigger business and inefficiencies begin to occur more and more frequently.

When it comes to the delicate subject of valuation of your business, the thing that generates the value currently may well be the very thing that you are wanting to remove from the equation - namely, you.

If you consider that in reality you may be the person who holds all the critical external relationships, your head is the library of solutions and advice, you face a reality check.

In almost all circumstances, selling a business includes an agreed period of the existing owner staying in the business for a length of time to support the new owner. My own observation at a variety of levels of company size is that this seldom ends well.

You get pissed off at the new owner for not following your advice based on decades of experience and they get pissed off at you for the fact that you don’t give them sufficient credit for knowing what they are doing and the new innovations that they are eager to introduce.

I have a very clear recommendation for any SME business owner that is even considering a sale of any kind. Prepare your business for sale in an environment where you are no longer critical. This is very hard for many people who have been “the boss” for as long as they can remember.

Who you need to transform into is the strategist, not the tactician. You need to build or develop the team around you to be able to operate the business without you as decision maker. Obviously you won’t do this overnight, but think of reaching that point as the place to be to start the process of marketing your business.

The strategy you should work on is ultimately to maximise the exit value of your business. You get one opportunity to cash out and you will ever regret it if you leave too much on the table.

This process can be pretty simple or it can be very complex, depending on how you have set the organisation up. Either way, it involves a systematic examination of every aspect - people, culture, values, products, services, customers, suppliers, marketing, distribution, what makes money and what doesn’t and then a plan for how to make all of these things as effective and efficient as possible.

Why should you do this? Because when someone is looking to buy a business, they will be looking at the things that they can do to improve it from day dot and you can bet that they will use this as leverage to discount the value of your business.

I can assure you that unless you have some superpower hidden somewhere, you will not look at the operation like an outsider. You are so embedded in it that you just can’t se clearly.

Just ask yourself this question. What are two things that I know are important to my business that I haven’t made any real progress on in the last 12 to 24 months. I would almost guarantee that they are there to find.

These are the things that you, now in your role as Chief Strategist need to address. Business as usual belongs with other competent team members. You are metaphorically cleaning, polishing, repairing and recalibrating the entire business to achieve your goal.

Apologies in advance for the reference, but you are making sure your business is in peak physical and mental condition, has clean nails and hair and is wearing it’s most flattering outfit.

RegenerationHQ is here to help with every aspect of preparing your business for sale and with our business broking partners, even supporting the sale itself. Make an appointment for a free consultation and see if we’ve got work to do together.