The Life of a Business Owner?

You’ve spent years building your business. It started small and grew in leaps and bounds.

You added staff, new products, and services. The future looked bright.

Speedbumps you met on the road you overcame by working harder, relying on the skills you used to tackle obstacles during the start-up phase.

The bigger the company became, the harder you worked. You started earlier and finished later at night.

You spent most of your day putting out fires.

You had no time to spend on the vital, but not urgent, tasks that propelled your company forward. Tasks you used to look forward to.

Running your own business is no longer fun. You cannot remember the last time you took more than a few days’ vacation.

You suffer from burnout and your health is failing.

You manage to hold it all together.

Just.

But at a price.

And you wonder how much longer you can cope.

You read about people looking to buy established and profitable companies. You think, maybe this is the solution.

Sell the company. Take a break and regroup.

You meet with a few potential buyers introduced to you by your accountant.

After the initial pleasantries and you entertaining everyone with a few amusing anecdotes, you are peppered with questions.

Do you have a business plan?
Can we have the audited accounts for the last 3 years?
What’s your gross/net/profit margin?
What’s your performance against plan?
Do you produce monthly management accounts?
How do you manage your cashflow?
What percentage of sales and profits are your top 10 customers responsible for? Your top 5? Top 3?
How does your sales and marketing attract new buyers?
How much does it cost to get a new customer?
How much do you want for your company?

This barrage of questions makes you realise that you do not know your business as well as you thought. It dawns on you that maybe your business is not ready for a sale because there is very little, if any, transferable value there.

Your business is a job. A tough one at that. And very few potential buyers are looking to spend money on getting a job.

Most are interested in acquiring cashflow, assets, established systems or human/technological know-how.

You quickly realise that the improvements required to prepare your business for a successful sale are the same changes required to make the business less reliant on you. And thus, more valuable. And more enjoyable to run.

The initial steps required for this improvement are:

1. identifying how your business creates value.
2. documenting step-by-step how your business carries out its value creation, and
3. assigning clear roles and responsibilities for tasks (company-wide as well as team-based); measure, monitor and review them frequently, on a weekly, monthly, and quarterly basis.

Once you have gotten this far, you may no longer wish to sell your company because you can now focus on the things that really make a big impact in your business.

Posted Using LeoFinance Alpha