Prepare Your Business for Sale [THA 315]
Episode 315 •
16th February 2023 • Remarkable Results Radio Podcast • Carm Capriotto, AAP
00:00:00
00:42:47
Shownotes
Did you know 80% of small businesses do not survive the departure of the current owner? When is the right time to prepare your business for sale? The day you opened your business! How do you maximize your selling price? Is there a simple way to quickly valuate your business? Hear from 3 business coaches on the importance of properly planning your business for sale.
Watch Episode HERE
Bob Ward, President of Wardden LLC, Look for Bob’s Previous Episode HERE. Perpetual Business Co website HERE. Rick White, President and Lead Coach for 180BIZ, Listen to Rick’s previous episodes HERE. Chris Cotton, AutoFix Auto Shop Coaching, Chris Cotton Weekly Blitz PodcastShow Notes:
- Understand your business Profitability
- Selling your business properly takes planning- don’t have a reaction selling plan. Never make a decision in a ‘valley,’ aka emotional.
- You can’t sell sweat equity.
- Your business is for sale every day- every decision affects your business.
- Your goal as an owner is to work your way out of the company, not get stuck in the job.
- What is your identity? What is your identity post ownership?
- To maximize your selling price, you need two things: Sustained profit (typically an 8 to 10 year runway) and a business that will operate without you.
- Staff is aware and supportive of the owner's succession desires and planning- everyone should be involved respectfully. Your team wants certainty. Create a haven where they can feel safe, do their job, be challenged, be a part of something, and have fun. Do you have the right people and team in place?
- What is the market for selling your business?
- 80% of small businesses do not survive the departure of the current owner.
- Hiring is like fishing- know what fish, what bait will attract the fish, and where is that fish. Consider ‘ownership potential’ when hiring quality staff. Show a future no one else does.
- What does training do? Improve skills and communication. The more we communicate, the less friction there is in the business.
- Valuate your business- the stuff inside your building, cash flow, multiple average 2.5. Take your assets, 25 cents on the dollar plus inventory as part 1, then your cash flow multiplied by 2.5 to get a ballpark number.
- 6 Metric Multiple- how independent is the business from the owner? Customer facing employees tenure, production staff tenure, stability, revenue trends, gross margin trends and SOP for business.
- Multiplier- confidence factor. How confident will the new owner feel when the old owner is out?
- Financial records are pure, accurate, and updated- get your balance sheet right, and don’t hide cash from the business.
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