Keeping the end in mind can only help
My father used to tell me, “Everything comes to an end” – including your role in the business you founded or bought. While it might seem sad, it’s the truth, whether or not you choose to accept it.
Remember when you were 25 and in the early stages of your career? Your world was filled with hopes, dreams, and possibilities for the future. It seemed like those days were going to last forever. And then they didn’t.
Suddenly, you’re 60 years old and wondering where the time went.
But If you’re happy running your business, thinking about how your business will end is the furthest thing from your mind.
Will you hand over the reins to a family member? Sell it to an outside buyer? Or wait until your health fails and you are no longer able to make decisions that are the best for your family and your employees?
If your family members have no interest in running the business, you may envision selling your business – on your terms and your timeline.
The Time to Prepare Is Now
Many business owners believe that actually selling a business is the toughest part of the process. That’s not the case.
You can always find a buyer if your business is sound. The real work comes during the years spent preparing for the sale.
Since you never know what adversities will arise (or when), it’s best to prepare your business for selling years in advance.
So what can you do to prepare for the sale? It starts with the following simple question: Would you buy the company in five years?
Put yourself in a buyer’s shoes and look objectively at the merits and shortcomings of your business.
Owners often underestimate the gravity of this question. Buyers aren’t going to give you the benefit of the doubt. They need hard evidence that your business is worth their investment. That means showing these five things:
- Your finances are sound
- Your intellectual property is protected
- The true value of your business calculated through an objective, accredited valuation
- Your have an experienced and talented leadership team in place
- And your business can thrive without you
It may seem like a tall order. And if you’re new to the game, it is. These five benchmarks take time to achieve.
Start Early
Smart business owners have an exit strategy in mind early – even if that means starting to plan for it 20 years before their anticipated retirement. Thus, every business decision they make is influenced by what is needed to make the business coveted by potential buyers.
Unfortunately, most owners wait until they near retirement to formulate a plan. Once they jump in the business development game, they realize they aren’t up for the task.
If you discover your business isn’t ready to sell when you are 65 or 70 years old, you’re not going to have the time or energy to do what’s necessary.
You need to start planning to sell your business well ahead of time, so you can be ready when the time comes. It’s never too early to start preparing for the end. While it’s true that everything comes to an end, it’s also true that you never know when that end will be.
Not sure how to get started? Check out my FREE download, Succession Planning Simplified. Still have questions? Give me a call and let’s chat. (5612) 543-2323