Ask yourself this question: “Do I own a business or a job?” How you answer that question will determine how much your business is worth and if it is sellable at all.
It doesn’t matter what industry we’re talking about, how big the business is, or how long it has been operating. For example, the owner could be the only merchandise buyer for a retail store with all the knowledge in her head, all the professional relationships are based on personal contacts that will not transfer over to a new owner so the look of the store would not be the same.
Business buyers are very concerned when the owner is the rainmaker, the one person who is making sales happen. The big concern for buyers is when all the sales are based on personal relationships that the owner has, the buyer might think that those relationships will not be transferred.
Of course, that’s not to say the new owner will not work hard and serve as an integral part of the business. Rather, the owner’s main role should be general management, overseeing long-term strategies and growth objectives, not becoming immersed in the day-to-day technical details of running the business. Those duties are best left to employees who will likely stay around after the new ownership takes over.
If you want to sell to the largest pool of buyers – the individual buyer – at the highest price, your (the owner’s) job responsibilities MUST be easily transferrable. That means that the business must be able to stand alone without the owner. To quote Michael Gerber of the E-Myth, “Work on your business, not in it.” Revenue must continue to flow after the owner exits the business. You wouldn’t expect the business to grind to a halt if the owner takes a vacation, right? Just think of a sale as an extended vacation!
If you need help putting together a strategic plan, please contact the Benjamin Ross Group to speak with a business broker who can help you start the process.