Business owners talk to each other. Especially business owners who are going through the same challenges – like selling to retire. They know that if they don’t have a plan for their money, then someone else does. So why don’t they do the things that are needed to plan a proper exit?
- Some business owners don’t plan their retirement, or exit, because they just don’t know where to begin. I get that. It’s a daunting task. And it’s an enormous one. The consequences of getting it wrong are huge. So a lot of people freeze. They know that doing nothing is wrong, but it’s more comfortable than actively making a bigger mistake.
- Some people walk into our office and hand us a decade worth of data on their business. Others take a conversation or two, or more, to get to know us before they open the kimono. But the real problem area for discussion isn’t financial, it’s personal. Specifically, either the business owner doesn’t know what they want to do when they retire, or, if they do know, they don’t know if they can afford to do it. And that’s understandably hard to talk about.
- Another reason business owners don’t plan their exit well is because they’re too busy doing all the things someone else should be doing for them. Frank Sinatra didn’t move pianos. Yet I see it all the time, “nobody can do it like me so I’ve got to do it all.” It’s the number one way to be sure that your business underperforms its competitors.
So, once again, today’s conversation is about accelerating the value of your company so that you can a) earn more income now, and b) sell at a higher price when it is time to do so.
We could probably each come up with our own top 5 reasons to enter strategic planning, but we’re going to focus mainly on those two.
I do like to focus on the bigger picture first – we can’t get to the finish line if we don’t know where we are starting. That finish line is selling your business. Selling your business can be hard. 80% of businesses that are listed for sale, do not sell. So it’s good to focus on the end goal.
If someday you want to sell your business, you have to make it attractive enough for someone else to want it. We, as humans, ascribe more value to things we own than things we don’t. So you will need to address that fact – that the buyer of your business will not look at your baby the same way you do. A sophisticated buyer will look at several factors in assessing your value, and we’ll address those. But first, keep in mind, you’ll never sell your business if you don’t make it transferable.