Some business owners try to change history!
As much as we would like to sometimes, we just cannot wind the clock back.
What do I mean by that? Well, every day in business we are creating a history of the business’ performance. Every single thing that happens in the business is there for everyone to see – including future potential buyers of the business. And that’s why I keep emphasising to business owners “be aware of the history you are creating.”
One of my mantras is “Keep the 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 ‘profit’ to the owner, turnover, and gross profit on sales. The longer they have been going up the better but at least over the last three years. Steady growth is preferred by most buyers and analysts, not sudden increases or decreases. Consistency is very important and spread over a good diverse mix of clients. (One major client is a risk to the business. See my blog post “The most dangerous number in business!) It can take years to get to this ideal state.
One bad year can make a big difference in the value of a business and can put buyers off – big time! Avoid bad years with a good marketing and sales process. Many businesses I get to look at simply do not have a well constructed “sales process” for their business. This is absolutely critical to keeping the numbers going UP and maintaining consistency over time.
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. The same applies if you want to keep the business and have it running under management!
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. A business that’s ready for sale is well worth keeping! You want to be 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 by setting up dashboards. Keep your eye on the ball all the time.
As a member of a Business Owners Taking Action (BOTA) group you get a business review to let you know exactly the areas you need to work on to improve the value, make it run under management and attractive to buyers. Your business should be “sale ready” all the time.