Here’s an interesting question.
If somebody put your business in front of you tomorrow and asked you to buy it with your own money, would you?
You know the customers, the team, the reputation and just how much work has gone into building it. But a buyer doesn’t have that history. They’re looking at what’s in front of them and asking a much simpler question:
What am I actually buying?
That doesn’t mean they expect perfection. Far from it.
But they do want to understand what happens when you’re no longer there.
It looks different from the other side of the table
When you’ve owned a business for years, you naturally see it through the eyes of the person who built it.
You know why that particular customer gets special treatment. You know which member of the team can be trusted with almost anything. You know that March is always quiet and September is normally brilliant.
A buyer doesn’t know any of that.
They’re trying to understand how predictable the business is, where the risks might be and how much of its success depends on you personally.
That’s why two businesses with similar turnover and profit can look very different to a potential buyer.
One might feel straightforward and relatively easy to take over. The other might leave them thinking, “This all seems to work brilliantly… but only while the owner is here.”
Guess which one is easier to buy and which is worth most money?
You probably have more to work with than you think
This is where conversations about selling a business can become a little intimidating.
You start hearing about systems, management teams, recurring revenue, customer concentration, management accounts and dozens of other things you apparently need to sort out before anybody will come near you.
Before long, selling the business starts to sound like another full-time job.
This is where a Business Coach can help you get the business fit for a sale. And your accountant, provided they’re experience in selling businesses, can help get the accounts looking good with solid foundations to withstand scrutiny from a savvy buyer.
Very few businesses arrive at the point of sale beautifully packaged with every problem solved. There will almost always be things a buyer questions and areas that could be improved. But the more of these that are sorted before going to market, the faster the business can sell, and the higher the price achieved.
The useful part is knowing what the important factors are, early enough to do something about them.
Don’t wait until you’re “ready”
One of the biggest mistakes you can make is deciding that you’ll talk about exit planning once the business is ready to sell.
How will you know?
There probably won’t be a magical Tuesday morning when you walk into the office and think, “Excellent. Everything is now perfect. Time to sell.”
In reality, exit planning is a process and many business owners only ever do it once. It’s probably the biggest sale you’ll ever make!
You might discover that reducing your involvement would make a significant difference. You might need to strengthen part of the team or make the financial picture easier for somebody outside the business to understand.
Or you might discover that you’re in a much better position than you thought.
That’s exactly why it’s worth looking at it before you need to make a decision.
You don’t even need to know how you’ll exit
Selling to another company is only one route.
You might eventually hand the business to a family member, sell to your management team, explore employee ownership or decide on something completely different.
You don’t have to know the answer today.
Good exit planning is about understanding the options and putting yourself in a position where you actually have some.
And, conveniently, most of the things that make a business easier to sell also make it better to own in the meantime.
A business that relies less heavily on you, has a capable team and gives you clearer information is hardly a bad thing to end up with, even if you decide not to go anywhere.
Start with a conversation, not a checklist
So don’t look at your business and think you need to fix everything before you can start thinking about an exit.
That’s backwards.
Start thinking about the exit so you can work out what needs fixing.
You might be years away from selling. You might never choose to sell at all.
But understanding what somebody else would see when they look at your business can tell you an awful lot about what you’ve built.
And you may find you’re closer to being ready than you think.
