Growing a business can be a confusing game if you are not clear on how to extract yourself from the busy day to day.
Moving away from merely owning a job means developing the business as a saleable asset, says long-time business strategist and exit planner Denise Hall.
Whether you are actually planning to sell, or simply want to enjoy the freedom of a business that runs on its own, focusing on building a business asset will liberate you from all the work of business growth.
“Make no mistake, exiting your business is inevitable,” Denise says. “One way or another, you will leave your business. I encourage business owners to do the work of finishing the unfinished business.”
Denise walks the talk. As a woman who consistently generated over one million dollars’ business revenue, she worked her way into The Wall Street Journal’s Million Dollar Club. Only three percent of all business women achieve this exceptional feat.
After personally building and selling three successful businesses, Denise shifted her career in July 2011. Now she is dedicated to providing strategic support and advice to business owners trying to work out how to define their own end game.
When your aim is to develop a business asset, there is more to think about than simply ramping up profits or increasing sales.
Finding the best time to sell the business is usually driven by three key considerations:
A business of value is one with watertight operations that run like a well-oiled machine. The owner can ensure healthy profits are generated on the strength of robust processes that are sustained without their direct input.
“This is where systems and staff come into their own,” she says. “From a saleability perspective your staff must be able to replace you. They need to have the expertise to transition the business from your ownership to the next party.”
Building a business asset puts the owner in a comfortable financial position, but this will come to a certain end if the business is sold. Hall asks all of her clients if they can actually afford to sell their business.
“They need to have set up a replacement for the cash flow they are about to sell,” she explains.
Business owners dedicate themselves to a lengthy journey of building their business, so the transition of the sale can be personally significant. Hall encourages owners to have a clear view on the timing of the sale.
“Do you have something else meaningful to pick up on the other side of the sale?” she asks them.
When asked how long it takes to sell a business, Denise answered without skipping a beat, “It depends on how prepared the business is.
“The actual sale process should take anywhere from three to nine months. But if you haven’t done the work to prepare your operations, your personal cash flow, and your lifestyle priorities, the asking price will often dictate timing.”
This means that you might be forced into choosing between a fast sale, or a financially rewarding one.
Denise recommends having your business appraised early, to determine just how big the gap is between what you think it’s worth, and what it’s really worth. At least then you will know where the goal posts are.
“If you want the asking price higher than it is now, then you’ve got work to do first.”
A business owner’s view of success is often muddied when they’re trapped in their daily management trenches. But establishing a long-term plan to show the way forward allows you to build a business asset with lasting value.
