When you decide to sell your business (or someone approaches you to buy it), you have a series of actions you need to take. Typically, you will at least consult with:
- A valuation firm that’s expert in providing you a business valuation opinion,
- A business attorney to help prepare and negotiate a purchase and sale agreement,
- A business broker, investment banker, or M & A Advisor to identify qualified buyers and help negotiate the sale,
- A CPA firm that can evaluate your financials and make recommendations for accounting and tax implications, and
- An estate planning attorney and your wealth manager to ensure you have adequate plans developed for your future financial needs.
Are you done yet? Do you have your transition advisory team all set? Or are there some gaps? For instance, do you have a transition advisor who can help you develop your “selling your business” transition and strategic plan – that is, a process to evaluate your:
- Readiness to sell, both personally and professionally,
- Business systems and procedures,
- Sale options (at least 10 of them might apply),
- Decision options for your current staff, and
- Decision options for your increasing the value of your business.
Reasons to Sell?
What if you are considering a sale because you:
- Are tired of running the business,
- Want to apply your talents to a new venture, or
- Have accomplished what you set out to achieve and want to move on.
What if the money you hope to get from the sale is not sufficient to fulfill your goals?
If you are advised your business’ value is not what you hoped it would be, you can still go ahead with development of a sale process. But what if you want to increase the value and are willing to plan a transition process that occurs within a 5-year window if certain benchmarks are achieved?
If you do want to do this, here are 3 tips you can take to improve your business’ value. At first blush, these tips are not measurable. They are categorized as “intangible” activities that will eventually result in tangible, measurable metrics. So, they may not appear of tangible value, but sometimes you do have to wait for the bread to rise. According to most research, intangible assets are viewed as drivers of future earnings.
Tip 1: Conduct a business process improvement review of your business systems and procedures, including, but not limited to:
- Hiring and training,
- Management practices,
- Product and service development,
- Financial management,
- Information flow, and
- Business resiliency and continuity.
Why might this be necessary? Let me ask you, are all your procedures written, efficient and effective? Are they regularly subject to continuous improvement review? Or, are they unwritten, sometimes followed, sometimes efficient, sometimes effective, and have never been reviewed? How many leaky buckets are there? Dripping away.
Maybe it is me, but every business I have worked for and with has always been able to improve its processes, thereby improving efficiencies, and achieve better performance. Think of how much tangible value you might add to the bottom line – without spending more money?
Tip 2: Evaluate your management talent to see if they are aligned and engaged with the direction you want for your company and for themselves, using a person-future fit process review.
- It is quite common to find that management personnel are not engaged and aligned.
- Sure, these managers may be quite talented and expert in their subject matter – but are they in the right seats in the bus, helping to move the bus in the right direction, all at the same time?
- Think of a champion crew team competing in a Regatta – team, alignment, moving in the right direction with the right timing.
- Be open to recruiting the right person for the right future-fit.
Again, these are intangibles, but a thorough process review of your management talent can help improve your tangible performance.
Tip 3: Take the time to develop a personal transition plan and strategy, whether you intend to continue working or not. Doing so will enhance the value of the business decisions you will make by clarifying your “why.” Look at the value of, and alternatives for your:
- Social connections and where you want to live,
- Physical, creative, and recreational activities,
- Activities with spouse, significant other, and family,
- Intellectual stimulation and physical health,
- Volunteering and faith-based activities.
Above all, understand you have the time to develop a plan, and you will have the time to implement it. Unless you are rushed (or ready) to sell, you have time – plenty of it. You have time to create something tangible from intangible actions. Researchers agree it is worth the effort.