It’s winter and unless you sell snow shovels, parkas or wood stoves you are thinking about how Spring is going to look. Will Brexit or any other outside factors drag your business into a hole that you can’t get back from?
Is it time to sell the business? Over the past 20 years of helping people retire better, my clients have benefitted from having a plan and some secrets. How long does it take from start to finish of selling a business?
Did you know that one statistic says that 80% of all business sales fail to complete. I have created a 4.5 part list of items that create problems in the sales process. If you work on these early and are focused on making them consistent and founded in reality it will help you kick back on that beach listening to Margaritaville.
P number 1 is Price.
There are a number of factors that you are looking for when it comes to the price you set for your business. Most people start off with a bond villain laugh and say my business in worth a bazillion pounds. Then they come to a reality and say I would need £1 million to walk away. The bad thing is that what you need and that you are going to get are two different
things. The factors that create your price are three fold.
Profit + Growth + Sustainability = The base of your price. This is all about how the new owners will be able to profit and build on your business. What other companies like yours are being sold for. How much of your business is based on you and not on your systems, if you have to be there all the time then you business is worth much less.
P number 2 is Pension.
In the world of pension deficits, and large retiring work forces you need to be aware that if you have a big pension or even a small one that the new owner would have to manage, top up or service that is non contributory it can kill the deal.
P number 3 is Property.
Depending on where you do your business from and how necessary it is to the business will determine if this breaks the deal. Normally the current retiring generation wants to use the property as part of their pension income. The new owners don’t always want the previous owner as a landlord.
Oppositely the property might not be part of the business plan of the new business owners and they don’t want it. So don’t let those bricks and mortar build a wall between you and your retirement dreams.
P number 4 is People.
This is the most important. If you are the main person and you want out and don’t like to have a boss because you were the boss then be like a Boy Scout and “Be Prepared.” Otherwise your
Tenderfeet will have a a hard Life. (Sorry got stuck in an Eagle Scout bad pun set.) If you are the rain maker or there are people that you need and they would leave then you may have a problem.
Make sure you have engaged or is engaged your team members that are needed or needs to go. Get the people right in the business before you hand people your business for cash, and this is even more essential if you are going to be paid on an earn-out (one up front payment and the
rest of the payment based on business performance over the next couple of years.)
The .5 P is the one that kills more deals than all the others combined.
This is the one that kills all sales, not just the sales of your business. This is the Procrastination! The longer that deals last the more people have deal fatigue. Just get it over with… This make the price drop and drop faster than a dog juggler on Britain’s got talent. If you can plan all the Ps and get a clear message in your head as to your position on the 4 Ps the .5 P will not be a problem.
Make sure you the Professionals in place and understand what a realistic price is and that is where you should set your lines in the sand. Good luck and looking forward to seeing what 2019 brings for your transition. There is so much to look forward to in the Midlands with the Common Wealth Games, 5G networks and our thriving tech community. Remember it is always best to sell your business as it is growing.
