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“under management, not run by owner…”

 

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Further to my post of April 28, lets explore the next of the elements in gaining a more favourable “Sellability Score” i.e. a more saleable asset. That is, “under management, not run by owner”.

Pretty self-explanatory, right?
Yes, it is probably true enough but most businesses do not grow to a size that enables bringing in a manager to drive the business on behalf of the owner. And if the business revolves around the owner and the owner wants out – then what is the buyer buying exactly?

I cannot emphasise enough how important it is to be really clear about what business you’re building. If you have no intention of having your business feature in your “asset portfolio”, know that it will cap at your skill set and energy levels. It will be as good as it gets!

Only Monday morning I was having this conversation with Liz O’Dwyer, from Business Success Radio. What a business owner decides to build is up to them, but knowing what is being built is paramount. So what do I mean by that?

To use the real estate analogy, think about the purchase of a personal/holiday home vs. an investment property.
Ways of treating the research, the buying and the ongoing maintenance are quite different for each of them. So is the mindset.  Now, think of a business. The same principle applies but there is no way of differentiating by title which one is being built.

And there in lies the problem.

If you want the business to revolve around you i.e. build it so that you “live” in it, so be it. But know that is what you’re building and that will not be an asset to sell. Yes, you may be able to sell parts of the business, like a client list for example, but not as a whole, which is more valuable.

If instead you want to build a business that is NOT one you want to “live” in, i.e. build it as a saleable asset, a different business model is required and must be executed,without you being in the middle of it.

Not sure? Think of it this way…
Once you start engaging others as part of the fulfilment of your business offering i.e. servicing multiple customers at once and hiring suppliers for example, then you are going down the “investment property” path and can seriously consider building something a whole lot bigger than first thought. You have the platform of an asset from which to leverage.

Ultimately though, it is your decision…

Related posts:

  1. “less ongoing customisation is required i.e. there is a standard formula used for all clients”
  2. “size matters; the larger company the better…”
  3. TEMpting; How Business Buyers and Sellers Have Been Tempted This Week…

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