Why You Should Build Your Business to Sell
.
.
“We can’t find a buyer so we are shutting down.”
This was the sad realization of a tea shop in Arizona. The historical site was shutting down, the land going up for the sale, the business parted out.
Hundreds of people commented on their post lamented the loss of this cute business.
I reached out to the owners, curious to learned if maybe their business is was a good investment for my husband and I. They had a lot of fans, the business was cute and fun, I hate seeing businesses shutdown, and I have a background in restaurant management. I wanted to learn more.
I was immediately met with hostility. Seemed weird for someone who wanted to sell their business.
In our short conversation they changed their price a few times, told me that I was incapable of running a business from a distance, were overly concerned about perceptions of their business, and ultimately were so defensive and aggressive that I politely bowed out.
Here’s the thing: they did not build a business with the intention of selling.
Because they didn’t build to sell they didn’t know how to navigate questions and concerns about the health of their business.
Many business owners do not build with the intention of selling.
.
Their business is their baby. Their business is their blood, sweat, and tears. No one else is worthy of running their business. They cannot put their business in a place it might be judged, they cannot handle questions. This business is precious to them. Only they can run it right. They would rather see their legacy end than risk someone doing it “wrong”.
.
The problem with this mentality is that eventually we all want to retire. We get too old, bored, or just need a change in life and can no longer run our businesses.
.
Selling your business is not a bad thing, it is a natural cycle.
If you do not plan for this natural cycle, you end up saddled with a business that is dragging you down. You want someone to take over but you haven’t created the tools that they need to be achieve that.
So you continue to feel defensive, begrudgingly try to keep it running, and ultimately close the doors and walk away.
Let’s build your business for something better.
.
.
Here are five ways to build your business to sell
.
1. Make an exit plan
.
Make any ideal plan of what it will look like when you are ready to retire.
.
Are you planning on your business going to your family? Does your family want to run your business? What finances will need to be prepared? Are you willing to carry a loan for the new owners? What things do you need the new owners to know? How long are you willing to train the new owners?
.
What valuation are you hoping for? Are you close to that valuation?
.
What needs to be added to your business to make it more viable to sell? What information do you always need to have available?
.
Make a list and a general outline of what you need to prepare in order to gracefully exit your company.
.
.
.
2. Create basic systems
.
In order to sell for top dollar, and as seamlessly as possible you need systems. You need every role, every task in your company organized and systematized. That is a very large and hard task, especially if you are just barely figuring out how to run the business yourself.
.
Start with the basics. If you own a restaurant make sure you have a copy of all recipes – no approximations. If you are a service-based business make sure you are compiling the way that you perform your service.
.
Create the basics, then create more, and more.
.
;
.
.
3. Don’t hide money
.
Several years ago my husband wanted to buy a mechanic shop. They wanted $600,000 for their business. We didn’t have $600,000 in a suitcase in the car (who does?) so we opted for a business loan. Because the business had been running for several decades we could use the business financials to prove that we could make loan payments.
.
Here was the issue – the business was taking cash payments and not reporting them.
.
Because of this, their tax information was missing a very large chunk of their income. This caused the valuation to look inflated and bank loans to be denied. Report your income. Not only is it illegal to hide money, it can also make selling your business complicated or even impossible.
.
.
.
.
4. Build with the end in mind
.
You build things differently when you know your business has to run without you. You are more careful as you set up processes. You look for different growth opportunities. You look for ways to move your business out of your home. Creating the goal of selling your business one day shapes the way that you make choices and your build you business. You add more assets, you following your balance sheet better, you pay more attention.
.
Another huge benefit that building with the end is the awareness that your business is not all about you. This shift helps you add staff and create a business that other people can fit into.
.
.
.
.
5. Replace yourself
.
If you are going to sell your business, someone else will need to do your job.
.
If you are the doer of all the work, you are not selling a business. You are selling a job.
.
Your buyer pool dramatically reduced if you are selling a 60hr/week job.
.
This was a huge part of the issue when it came to tea shop. The owner didn’t know how to replace herself. She was unwilling to discuss the sale of the business with me if I was not going to be the person in the shop doing all the work each day.
.
So, start working on replacing yourself today.
.
Replacing yourself looks like taking jobs off your plate and giving them to members of your team. It looks like creating roles that allow people to take several tasks off your plate.
.
If you are the owner of a creative business (like a photography studio) it looks like training and hiring other photographers. If you own a restaurant and you are the cook it looks like training and hiring new cooks.
.
Your days of business ownership will eventually come to an end.
.
.
If you plan accordingly you can walk away from your business with a retirement capital and a legacy that will continue. If you ignore the inevitable you will most likely end your entrepreneurship by sadly by closing the doors on years and years of hard work and walking away with nothing.
.
.
Start right now. Build your business to sell.
.
.
.
.
Join the Launch My Business Academy!
.
Learn each step of creating a successful business
