14 Aug Around the Web: A Week in Summary
A recent article from Forbes entitled “How to Find A Buyer For Your Business” explains the major components of a sellable business that business owners should factor in to their businesses framework.
Whether your goal is to sell your company or not, it’s smart as an owner to know how to find a buyer. Some day you may change your mind, decide you’d like to expand, be in need of funding or for any number of other reasons end up needing to rely on this skillset. In each of these scenarios you would certainly be kicking yourself if you’d never considered the possibility ahead of time. That being said, here are the things you should consider when building your exit strategy:
- Begin building your company from day one with the goal of finding a strategic buyer in mind.
- Know what acquirers want.
- Make connections early and maintain them over time. Your buyers may not always be who you expect.
- Hire a banker or a broker who can use their skillsets and connections to better position your business on the market.
- Focus your energy the most on building an excellent business. A well-built business is the best advertisement there is.
- Keep your financials and paperwork clean and updated at all times.
- Hire the best team and board possible.
A recent article from Allen Taylor Mergers & Acquisitions entitled “3 Reasons You’re Not Building A Sale-Ready Business” explores the major reasons why business brokers see sellers refrain from creating an exit plan, and the problems that each reason can create.
For many business owners, the humdrum of everyday operations and road bumps occupy the majority of their thoughts and time. This often leaves their exit from the business to be the type of issue that is ignored until it becomes a pressing one. Here are three major reasons owners aren’t building a sale ready business and why they should be anyways:
- They think they will never sell their business – Whether this means that they’re intending to pass the business to a successor or they simply never plan to leave their business, this thought process leaves out one important factor: life happens. Planning for a potential exit, even if it isn’t your plan A, sets you up for success even if your successor doesn’t work out or you become unable to run the business due to health or personal reasons.
- They’ll prepare their business for sale ‘later’ – Ideally, a business owner will spend at least 2 years preparing their business for sale if they wish to see the best results. Procrastinating can mean that important value is lost when the owner decides that they are ready to sell, or that their intended timeline ends up being pushed back in order to facilitate any necessary changes to make the business sellable.
- They aren’t sure how to start building a sellable business – If this is the case, there are plenty of available resources including advisors who can help owners navigate this process. A simple, minimal effort place to start is to get a business valuation.
A recent blog post from The Guardian entitled “Reconsider Passing Down The Family Business” discusses the realities that owners face when it comes time to make the decision of who to sell their businesses to.
It is not an uncommon dream for business owners to want to pass their legacy down to their children or to keep it in the family. However, it is a dream that is rarely achieved. Consider that only about 30 percent of businesses succeed once passed to the second generation. That number diminishes to 12 percent if the business reaches a third generation. If by chance, your children are genuinely interested in taking over the family business, be sure to set them up for success by ensuring that they have the proper training and skillsets to run the company. Otherwise, it is a good idea to consider other options for continuing to ensure your family has financial stability after selling your business. Some of these options include hiring a financial professional to help you invest the money you make from the sale or hiring a management team to operate the company while keeping the ownership in the family.