An ounce of planning

One of the hardest things about owning a business you’ve poured your blood and sweat into is knowing when to let it go. But putting off such a crucial decision is still a decision. It could be the worst decision you’ll ever make.

Contributor Andrew Rogerson, a Certified Business Intermediary in Sacramento, Calif., has this to say in my book, How to Sell Your Privately Owned Company:

“In my opinion and from what I see working as a business broker, far too many business owners leave or sell their business too late. As a result, employees become jaded because they don’t think ownership cares enough, suppliers start getting paid late and become concerned, and customers don’t get the attention they have come to expect. The slow decline starts building momentum, which ultimately results in a lower selling price for the business if a willing buyer comes along at all.

“Selling a business is not a quick process. I would suggest it takes at least 12 months. For a more complex business it may take up to three years.

“Selling a company also includes using professional assistance to coordinate and manage the different areas of selling a business such as the marketing of the business; handling the legal contracts; negotiations with different parties including the buyers, landlords, accounting and legal parties; and ensuring the business is protected from nosy ‘tourists’ who have no interest other than wanting to know what’s going on.

“What’s the best time to start considering an exit strategy?  That answer is easy. Each successful company has a business plan.  It should be standard operating procedure to do an annual review of the business to see if the goals for the previous year were met. If goals were met, how and why were they achieved?  If not, same question.

“With the review of the business plan comes forward planning. This is the time to consider an exit plan for the owner of the business.  If the business plan is to move onward and forward for the next 12 months, then a plan with any changes will evolve.  Understanding those changes, be they subtle or dramatic, demands attention. Once they are understood, those changes need to be communicated and executed.  The changes may demand that the business be downsized until the next opportunity is clearly identified. Alternatively, it may mean retraining some or all of the team for the next opportunity.”

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

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