Thinking ahead several years, what’s your long-term plan for your business?
There are many possibilities, of course, but the majority of people are happy owning a ‘lifestyle business’. They’re not really interested in growing their company aggressively. Their main priorities are generating a comfortable income and having flexibility and control over their time.
Others see themselves passing it on to family members when they eventually retire.
Then there are those who plan to sell up some time down the line. They want to build up their business to the point where it is an attractive purchase, make their profit – and then either retire happily on the proceeds, or start the entire exercise again with another company…
If you think that is even a vague possibility, you need to start planning now.
Even if you’re not yet ready for a detailed exit plan, it’s never too early to conjure up a clear idea about where your business will be when you sell.
You see, with that vision in mind, you can systematically build your company the right way, so that when the time is right, you can exit.
If you allow your company to develop more organically, you may find that your company is not attractive to a buyer when you decide it’s time to sell up, and that you have several years of work to do to make it ‘fit for sale’.
Things might take you in a completely differently direction – no-one can predict future, and this isn’t about being rigid in your approach. But like everything in business, you should begin with an end in mind.
So visualise what your business will look like when you sell it. How big will it be, how many locations will it have, what management structure will it have in place, and how much money will it be making? Bearing all that in mind, what might be your target price?
When you approach an agent to sell your business, their first question will be, “Who might buy it?” And that’s the most important part of your vision – to build a company that is attractive to potential buyers.
There are three different categories of people or companies who might be interested. First of all, there are those already in your market – probably a competitor or perhaps your own management. Then there are passive investors, who would continue to run your business as it is now.
Finally, there are companies who want to expand, perhaps doing something aligned to you but not competing with you. For instance, if you make plastic widgets, you might be bought by another company in your chain – a plastics manufacturer say, or a widget distributor.
The way you develop your business might change if you know you’re aiming to sell to a competitor, as opposed to one of your current suppliers, because their needs will be different.
Here at Insight Associates, we get involved in any number of exit plans, as well as the sales that follow.
None of them come out of the blue. All successful sales take place on the back of decisions about the strategic direction of the business which were made long, long before.
Very often, we were involved there as well, because to build your business the right way you need to ensure you have the funding in place for the necessary steps, and that your money is being spent in the most sensible way. As your outsourced finance department, that is the kind of strategic insight you get from us.
So if you don’t already have a clear idea of how you want the sale of your business to work, it’s time you did.
And if you think you could use some help either with a sale, or getting your company into shape so that it is sellable, let’s talk.