We all know those people. You know who I'm talking about. The ones who are so incredibly important that they simply can't make any social function, future commitment or take a vacation. The success of their business, and ultimately their own self-worth, are tied to being present daily in their role. Sometimes we don't even have to look further than the mirror to find one of these super heroes.
Super heroes, unlike business owners, live into perpetuity and therein lies the problem. When it is time to transition your business you ideally get paid for what you have built. This assumes that you are not the glue that holds everything together. Success should be measured not by the time you spend in the office, but the time you spend away from the office. The real value is in the team you have built and the processes you have implemented.
I haven't come across a buyer yet that is looking for a business that is successful because it's reliant upon them being there each and every day. Instead value is created when a seller can show a workforce in place. It's created when you can exhibit a refined set of processes or procedures and systems that capture and report the information needed so you can manage the business, but not also have to serve as the janitor, IT support person and the top revenue generator.
Wondering how to get these systems in place? Or how to become more efficient? Benchmarking allows you to compare your current situation to that of your peers, using real time data. Ultimately, it can be used to help drive success and adjust inefficiencies along the way.
So before you think you are ready to sell your business, go on vacation! And then come back and assess the business you left and where you need to make modifications. Then go on vacation again and repeat the process until you have a finely tuned machine that runs without you. Only then are you ready to sell your business.
And as a refresher, it's never too early to start thinking about selling. It's important to prepare in advance. By starting early, you can help ensure a smooth transition process. Here are a few tips:
- Get real. It's important to get a realistic expectation of what your business is worth now and how to increase that value.
- Gain understanding. It's helpful to truly understand what your options are when it comes to selling a business. There are several and it's important to think about each, as well as the pros, and cons, to your business.
- Be on the lookout. It's never too early to start exit planning. You may face a challenging and highly competitive market when the time comes to sell your business. Even if a potential exit is years away, it's important to focus now on key business issues, develop a planning process for the future exit and coordinate services with a wealth management team.
Contact your Eide Bailly Transactions Services team about preparing your business for sale and improving your business processes, systems and procedures or, about your upcoming vacation.