Most business owners are looking for increased profit this year, next year, growth and at some stage on the journey a better life and work mix!
What about selling a business?
Here are five reasons why building a sellable business should be your most important goal, regardless of when you plan to push the eject button:
1. Saleability means freedom
One of the fundamental tenants of saleability is how well your company would perform if you were unable to work for a while. As long as your business is dependent on you personally, there’s not much to sell. Making your company less dependent on you by building a management team and systems means you have the ability to spend time away from your business. Think of the world of possibilities that would open up if you could choose not to go into the office tomorrow….
2. Sellable businesses are more fun and interesting
Business fun… if you were able to spend your time or days on business strategy and ideas. Most business owners spend the majority of their day on the minutia: the government forms, employee reviews, bank reconciliations, customer issues etc. The boring details of company ownership and take the enjoyment out of owning a business—and it is exactly these tasks you need to get into someone else’s job description if you’re ever going to sell.
3. Saleability is financial freedom
You open your monthly brokerage statement to see how your portfolio is doing. Not because you want to sell your portfolio, but because you want to know where you stand on the journey to financial freedom. Creating a sellable business also allows you peace of mind, knowing that you’re building something that—just like your stock portfolio—has value you could choose to make liquid one day.
4. Saleability is a gift or a burden…
Imagine that your first-born graduates from university and as a gift you give him your prized 1971 Holden Monaro GTS. Your heavily indebted child takes it on the road, but after a few kilometres, the engine starts smoking. The mechanic takes one look under the hood and declares that the engine needs a rebuild. You thought you were giving your child an incredible asset, but instead it’s an expensive liability he can’t afford to keep, and nor can he sell it without feeling guilty. You may be planning to pass your business on to your kids or let your young managers buy into your company over time. These are both admirable exit options, but if your business hasn’t been tuned up to run without you, you may be passing along a lemon.
5. Rome was not built in a day…
Some things in life that take time, no matter how much you want to rush them. Making your business sellable often requires significant changes; and a prospective buyer is going to want to see how your business has performed for the three years after you have made the changes required to make your business sellable. Therefore, if you want to sell in five years, you need to start making your business sellable now so the changes have time to gestate.