Yesterday, yet again, I have met with a Business Owner who hired a Business Coach to assist them with their Exit Strategy only to find the business is no better off i.e. no closer to being exit-ready 12 months later and they’ve spent a whole lot of money to boot…
Here’s the thing from someone who deals in this space all day, every day – I have yet to meet a potential buyer who asks whether there’s a marketing and sales plan in place before they would consider buying the business, for example, it does not happen. Sure it may be in the mix of questions at some point but it only matters because of the way it is ‘sold’ to matter. The same goes for spending a whole heap on rolling on the marketing, trying to actually increase sales (especially without the infrastructure to back it up), bringing in a General Manager (without a well-thought out equity and game plan first), etc. And I’m yet to find an advisor who even asks if selling the business is the right thing to do for the Business Owner at this particular point in time, especially if the business features highly as their retirement funder.
An Exit Strategy, in the true sense of the phrase, to sell a business at a point in the future is about structuring the business ready for someone to want to buy it, but equally as importantly, it is about restructuring the business so that the owner can maximise their input with an impressive (and with expectations met) output.
In most cases, growth plans not executed well or quickly enough that make an instant difference are not useful.
The type of activities which make up a BEST Exit Strategy (and execution) are:
Clean and profitable financials for a least TWO YEARS, looking as shiny as legitimately plausible
Proving that the business is making money is important, but even more is that it will continue to do so, demonstrated by how well it funds itself
Establish recurring revenue models and lock them in
HR agreements (and implications) are well documented and understood
Signed contracts are in place and ideally have as much time on them to run as possible
Evidence of 21st Century considerations in both how the business fits into the future, including processes and technology
Where feasible, the business owner is NOT the centre of attention or attraction
If not, what can distinguish the business as a hub as touting that “we’re good at customer service” is not nearly enough
Actively demonstrate that customers will stay with the business based on gathered and documented feedback
That the current owner is VERY CLEAR about what they are doing next, i.e. living their new dream, which does not involve only playing golf or going on a cruise!
Admittedly, you get these right and growth may very well follow suit, and the owner may not want to leave after all (which has happened) but growth is certainly not the starting point.
Happy to talk through this at any time. If you want to explore what is useful and productive in an Exit Strategy in your context, please contact me.
Travel is one of the best things for clearing your mind and really being able to concentrate on what makes your heart sing. By default, in doing so can also upset the current apple cart, specifically if you realise that what you’re doing is not cutting it, i.e. it’s time for a change.
Over the 2015-15 break, I was most fortunate enough to spend time in Antarctica. Talk about getting away from it all! But as a business owner, I also appreciate how tricky it is to be able to arrange time away like this, amongst other things.
Whilst I didn’t have such a business-change epiphany this time around, I have in the past so I fully appreciate how hard it is to then return to bring the change to fruition, and how big a deal it may end up being…
As a business owner, changing can be tricky though, especially if you have others reliant on you, whether they be suppliers, customers or staff. That said, it can be done, yes really. I’ve done it, I’ve helped others do it and you can too.
Granted, it will take some time and effort to execute but getting out is doable if you are prepared to do what it takes. This means thinking and possibly acting differently than you have previously. For some, this can be confronting, but if the need to succeed is stronger than the need to maintain the status quo, then the outcome can prove most desirable.
You’re not going to know if you don’t at least explore options.
And that’s where I come in…
Talk to me about what you have, what you want to do/have instead and I allow me to help you realise your new dream! You’re invited to email me to book a date/time for a chat info@theentrepreneurialmother.com.au
Warren Buffett famously invests in businesses that have what he calls a protective ‘moat’ around them – one that inoculates them from competition and allows them to control their pricing.
Big companies lock out their competitors by out-slugging them in capital infrastructure investments, but small businesses have to be smarter about how they defend their patch. Here are four ways to deepen and widen the protective moat around your business:
Create an army of defenders
Ecstatic customers act as defenders against other competitors entering your market, a factor that has enabled many businesses to defend their market share in their market.
Get certified
Is there a certification program that you could take to differentiate your business? For example, a RTO (Registered Training Organisation). It was a lot of paperwork and training, but the certification process acts as a barrier against other people jumping into the market and competing in the same way.
Get your customers to integrate
Is there a way you can get your customers to integrate your product or service into their operations? Can you offer your customers training in how to use what you sell to make your company stickier?
For example, like how you use a Customer Relationship Management (CRM). Once the CRM of choice is creating a weekly sales funnel in a CRM platform, it harder to convince you to move to another. That’s what you want your product or service to achieve.
Become a verb
Think back to the last time you looked for a recipe. You probably ‘googled’ it. Part of Google’s competitive shield is that the company name has become a verb. Now every time someone refers to searching for something online, it reinforces the competitive position of a single company.
Is there a way you could control the vocabulary people use to refer to your category or specialty?
Widening your protective moat triggers a virtuous cycle: differentiation leads to having control over your pricing, which allows for healthier margins, which in turn lead to greater profitability and the cash to further differentiate your offering.
Which makes it even more Saleable when the time comes…
Interested in knowing how your business rates at this point in time?
Opt-in (over there ->) and receive the TEMpter which will take you through a checklist to ascertain just how ready your business is to sell right now…
I had the pleasure of presenting at the AAVIP Virtual Business in Brief mini conference in November 2014 (only just got the recording)
Topic: Start with the End in Mind (regardless of how old your business is)
Business Exit Strategies
“Thank you for agreeing to speak at AAVIP’s recent Virtual ‘Business In Brief’ Conference, we really appreciate your support and the feedback from attendees has been amazing.”
“Give yourself time – lots of it – if you want achieve the best outcome in selling your business.”
This is what I said to the good folk at BEmedia production recently, when they interviewed me for their Business Essentials Audio Programs…
If you’re thinking about selling your business, how about giving yourself three years to plan it all? That’s how long exit strategist Denise Hall would like to prepare a business for sale. There’s much to consider, she says. And don’t forget that an important ingredient is YOU and want you want in life when your business is finally behind you. Denise offers a 5-point checklist on what you need to consider before selling up.
Listen to it all hear…
Want to start this process softly softly, then I invite you to complete the Sellability Score questionnaire. It will provide a line-in-the-sand starting point, from which to build the plan. Once completed, I’ll be the one contacting you to talk through your plans.
