Selling your business can be extremely difficult, even moreso in a depressed market. However, businesses are still selling albeit not at the prices the business owners would like to get. The savvy business owners sold their businesses for the right price because they did the right things. Do you know what they are?

In this series of articles my goal is to share with you a few thoughts on some of the key issues you need to address now if you are considering selling your business.

“My Business Is My Pension”

You may be nodding your head and agreeing with me that the above statement is true for you. If so, here’s a word of warning. If you don’t do the right things now, then your business may become worthless and contribute absolutely nothing towards your retirement. Worse still, your business may become a chain around your neck that will not allow you to retire.

Hopefully I’ve alerted you to the reality that is facing many business owners every day. Before I share a number of tried and tested strategies you can implement to ensure you do not become another victim, let’s for a minute make a comment about your circle of professional advisors.

Most business owners ensure they use an accountant to overview their bookkeeping, prepare financial statements and account for the necessary taxes to be paid. Some have a lawyer who is rarely required depending on the type of industry your business operates in and the country you are domiciled.

Here’s my point…

Outside of doing what is already expected of them, what other advice and guidance have these professional offered towards your medium and long term goals for yourself or your business? After all, if your business is your pension, surely somebody is helping you manage and nurture your pension to ensure it is worth the right money when it matures?

Sadly, many business owners like you hang their heads in shame at this point. If you’re thinking that you have joined these mis-guided or mis-informed many, then fear not as you will soon have the answers.

You can start today and create more certainty for your future

At this point you are not being asked to fire your professional advisers. If they provide a good service and you have a good relationship with them, then why should you?

What I encourage and urge you to do is find a business consultant or adviser to work with you  to help you implement the changes you need now to steer your business into a brighter and more certain future.

Where Do You Begin?

Here are the simple steps you can take today to begin the process of creating a saleable business in the future.

1)      Find out what your business is worth today.

Depending on your industry, there will be a different measurement for valuing a business. This could be profit or turnover based or some other method.

If you’re not sure, ask the industry association if there is one, ask your accountant (they probably won’t know but tell you to work on a multiplier of your net profits), or speak to a business that is experienced in selling businesses. They may guide you better.

Whichever method you use, the important point is that you need to start somewhere.

2)      Now you know what your business is worth today, the next question may seem simple, but it needs a lot of thought. You need to decide how much you want to sell your business for and by what date.

Remember, the value of money in “X” years will be less than the same figure today, so add a further 30% to get a little closer to the figure you are looking for.

There’s another consideration here which is the great unknown. How much tax will you pay on this figure? So how much are you really left with?

If we assume 50% tax, in other words you actually receive half of your sale price, will this be sufficient for you to live off? Can you still afford to retire? If not, re-work the numbers and find a figure that you can afford to retire on. Is there a significant difference?

3)      So now, maybe for the first time, you have a starting position and an end position. Your role now is to manage the business with the view to closing the gap year on year.

Action Is The Key…

You now have the required targets for selling your business, and the work that needs to be done. So how are you feeling have got this far? Are you excited, afraid, shocked? I can understand that the numbers may have surprised and worried you.

In my opinion, you’ve done something many business owners fail to do. You have taken a giant leap by working out the numbers and facing the truth! Most business owners dream about selling their business and then bury their heads in the sand. The bad news for them is that…

Hope Is Not A Strategy

I’m sure you agree with this statement and yet the majority of business owners are running their businesses this way.

Let’s return to the numbers…

OK, so maybe you’re shocked, surprised or totally deflated by the task ahead.

Let me tell you the good news.

A good consultant will help you achieve the results you desire in a fraction of the time. So, the next step for you is to find the right consultant of adviser that you feel is the best fit for you and will help you achieve your targets.

Re-Engineer Your Business

What does this mean I hear you say? Simply put, this is looking at every aspect of your business from marketing to customer service using optimisation and innovation strategies and tactics to help you improve your business performance.

I’m sure you’ll agree that if you focus on and improve three key areas of your business by 10% then you’ll already have taken a massive step in the right direction.

But, this isn’t enough.

Re-engineering your business means taking a look back as though you have achieved the end goal. You should now have a clear picture what your business looks like, how many staff you need, the products or services that you sell, the strategic partnerships you have in place etc.

Targets now need to be set backwards. So, if you’re looking to sell your business in 5 years, what must you be achieving at the end of year 1,2,3 and 4? Once you have this information, break down the current year into mini targets, whether quarterly, monthly or weekly.

You will have a very good picture of the work that needs to be done and the targets that need to be met or exceeded to keep you on target. By driving your business through these targets and setting the goals for the month, you can confidently claim that your business will be your pension.