To build a business takes a free spirit, determination and a certain bloody mindedness. It is not easy. And when you finally are ready to sell the business, it may seem like the sweet final yard of the proverbial ‘thousand mile journey’. Ironically, the strengths that carried you to the final yard can be key weaknesses that can de-rail an efficient sale of the business.
Business owners need a certain ego. They naturally become the all knowledgeable head of the organisation, who knows how each cog in their business machine works, because at one point they juggled all balls. It can be a challenge to accept that selling a business is a separate skill, in itself, that requires being guided by outside help: primarily accountants and lawyers.
If you are not familiar with the business sale process it can be baffling as to why the process can take so long, involve so many people, and end up being so costly: “I want to sell, they want to buy – how hard can it be…?!” It’s a case of the old truth: you don’t know what you don’t know.
The business is only worth what a buyer is prepared to pay for it. The most successful sellers have advisors capable of recognising what wrinkles of the business will concern the buyer and coming up with good compromises to allay these fears without impacting on the price of the business or the seller’s future liability.
The business owner may sometimes be forced into a sale of the business before they are ready. This is even more reason to make sure that the business ‘housekeeping’ is kept clean and tidy, so that when the time comes to sell the buyer does not find unwelcome cobwebs in the corners. For example, employment contracts that are not up to date (or not even issued), contracts with customers or suppliers that are unsigned or not in writing, property owned in the business owners personal name, etc, etc.
The business sale process can drag the business owner away from concentrating on the core business for months on end. Important energy and momentum can be lost, marketing neglected, bookkeeping not kept up-to-date, staff not replaced. This is all the more painful if the sale falls through and the business owner has to repair the damage caused by a failed sell-out.
Whether to tell the key staff that there is a sale in the offing is the eternal dilemma. While the business owner may stand to make a handsome return and retire following the sale, the staff may be less enthused. Not many people like change. In businesses where your main asset is the staff the decision is often not to tell the staff and risk them starting to update their CVs.
Many business owners will have a sales & marketing plan, financial plan, perhaps even a recruitment plan – but few have a business sale plan, possibly because the business sale often seems years away. And yet the years pass and the business sale seems no closer. Successful business sales are planned years in advance. Profiles of potential buyers are identified and the business is groomed for sale.
If you have a question on any of the issues raised in this post, just use the contact boxes to ask us. We are here to help!