EXIT STRATEGY – INCREASING YOUR VALUATION
The Most Potentially Profitable Time In Your Business Is Right Before You Sell – You Either Leave A Fortune On The Table Or Take It With You.
Warning: Your Business Is NOT Worth What You Think It Is
What an exciting time – you are thinking about selling your business and moving into the next stage of your life and career!
You built more than a business – you have made countless customers happy, you created jobs and income for others, and you have built a legacy that you can be proud of.
You have put in countless hours and more hard work and sacrifice than you care to admit – and when it is time to sell all you can think is how lucky someone is going to be to just be able to walk in and take control of your money making machine.
So How Much Is All Of Your Hard Work Worth?
The problem is that too often we are so close to our business, and precisely because we know all that it took to get it to where it is now – we have a highly biased, and skewed, perspective.
The truth is, unless you have had a professional provide an actual valuation of your business and tell you where the market values it, then there is a much better than good chance that the price you have in your head is more than someone will be willing to pay.
There are instances when one partner buys out the other for 10 TIMES what their share is actually worth, precisely because they valued it with their heart and not through a professional.
And while this sounds depressing, there is no need to get angry or worried – the problem is almost always fixable – and as one of my favorite sayings goes: the juice is definitely worth the squeeze!
The First Step To Increasing The Value Of Your Business Is To Know Your Starting Point.
There are many things that are involved in determining the value of a business.
It is not an exact science but there are many important areas of the business that the buyer will look at to determine what they may be willing to pay.
The important thing, if you are hoping to increase the value, is to stop looking at your business from an owner’s perspective and start thinking like the buyer.
Quite honestly, they have many other options on where they could put their money and if they are going to invest (yes, INVEST) their hard earned money into buying your baby, then they want to feel like it will provide them with a strong return on that investment.
Reducing risk from the business. Making the business as predictable and repeatable as possible – these are the areas they will be diving into in the business.
So, before you apply the price tag let’s focus on increasing the value of the business.
While there are a number of things that we cannot do much about such as industry trends and government regulations, there are plenty of things we can focus on and impact in order to create a significant change.
Of course there are the obvious factors like revenue and profit – but often things like the risk associated with you leaving the business (assuming you don’t want to work as an employee of the new owner) and the defined structure of the business go untouched – potentially leaving too much uncertainty in the mind of the buyer and so they either walk away entirely, or perhaps reduce the price.
In either case you could be leaving many multiples on the table and in essence getting paid only pennies on the dollar for all of your hard work.
Spoiler Alert: You Will Not Get Credit For Improving Your Business Performance For 90-180 Days Before You Sell. Results That Will Alter Your Valuation Need To Be Structural And Baked Into The Business Over Time.
Results need to be baked into the business in order for you to get their full value.
Sad but true. The potential buyer is going to be doing everything they can to lower the price on your business and the argument is that short-term improvements could be only a one-time situation – hardly something they will pay for let alone at a multiple of earnings.
What does that mean? It means that the buyer is looking for the performance of the business to be predictable and repeatable. Something they can, more or less, count on. They too want to know their starting point so that they can run their financial models and dream about building significant equity for their exit as well.
So the longer an improvement has been in the business the more value it has.
The Most Profitable Time In Your Business By Far Is The Time Leading Up To The Sale Of It
NET PROFIT
YOUR INDUSTRY MULTIPLE
SALES PRICE
$100K EXTRA PROFIT
YOUR INDUSTRY MULTIPLE
In essence you did the amount of work it took to earn $100k but actually earned $500,000 as a result.
If it gets any sweeter than that – please let me know about it!
And since we know the areas that can provide the biggest and quickest improvement to the value of a business, we have developed a number of packages to get you started on your path towards selling your business.
So how do we get started?
The answer is: It depends. It depends on where you are in the timeframe of your decision to sell your business.
To help you through this process, we have developed a handful of packages called our Business Clarity Packages that have been tailored to the different stages you will go through as you consider and then finally sell your business. Each has been developed specifically to provide you with valuable insights on where to focus your time. Feel free to contact us with questions about which package makes the most sense for where you are in your process.
QUICK START INDUSTRY INSIGHTS PACKAGE
Our first Business Clarity package, the Quick Start Industry Insights Package is for those that are just beginning to wonder where they stack up against their industry in order to get a sense of areas they can begin to work on in the business to increase their valuation.
QUICK START INDUSTRY INSIGHTS PACKAGE
Our first Business Clarity package, the Quick Start Industry Insights Package is for those that are just beginning to wonder where they stack up against their industry in order to get a sense of areas they can begin to work on in the business to increase their valuation.
This package includes:
- A report detailing how the industry is currently performing on a number of critical metrics in their Profit & Loss statements
- A Quick Value Assessment Questionnaire that was developed to give you powerful insight into your business and where to focus your time for maximum return.
- A Full 30 minute session to discuss the results and to help you prioritize initiatives in order to accelerate improvements.
Industry Insights & Valuation Benchmark Package
Our next Business Clarity package, the Value Builder Insights Package, is perfect for those that are at least a couple of years out from selling their business and want to begin making valuable changes in the business as soon as possible in order to get as much credit for the gains during the valuation and sale process.
Industry Insights & Valuation Benchmark Package
Our next Business Clarity package, the Value Builder Insights Package, is perfect for those that are at least a couple of years out from selling their business and want to begin making valuable changes in the business as soon as possible in order to get as much credit for the gains during the valuation and sale process.
This package includes:
- A Report that converts your numbers into plain English as well as a scorecard highlighting 6 areas of strengths and weaknesses, comparing 2 years of historical data to industry averages and industry analysts benchmark assessments.
- A report that details the performance of your industry as well as how your results compare – clearly showing areas of excellence as well as opportunity.
- Tips and recommendations specific to your industry for improvement in liquidity, profitability and sales
- A Quick Value Assessment Questionnaire that was developed to give you critical insights into your business and where to focus
- 2 full 60-minute sessions where we first take time to understand goals and then prioritize activity as well as discuss important insights and milestones to keep track of as you move forward towards the sale of your business. The second session is to take time to review your plan of action to attain your goals, discuss possible pitfalls and answer any questions you may have.
Valuation Accelerator Package
Our most comprehensive Business Clarity package, Valuation Accelerator Package includes an actual Business Valuation called a broker opinion of value that you can use to get a clear understanding of what your business is worth in the current market. This package is ideal for those that are serious about making valuable changes in their business. This is a process that digs deep into your business and your industry, taking into consideration all of the factors that impact your value so that you have complete insight and understanding about how the sale of your company will fit into your financial plans as well as clarity on the areas you can improve to build a stronger price point. With the report that is generated, it creates a powerful and comprehensive roadmap so that you are able to focus on those areas that will have the biggest impact.
Valuation Accelerator Package
Our most comprehensive Business Clarity package, Valuation Accelerator Package includes an actual Business Valuation called a broker opinion of value that you can use to get a clear understanding of what your business is worth in the current market. This package is ideal for those that are serious about making valuable changes in their business. This is a process that digs deep into your business and your industry, taking into consideration all of the factors that impact your value so that you have complete insight and understanding about how the sale of your company will fit into your financial plans as well as clarity on the areas you can improve to build a stronger price point. With the report that is generated, it creates a powerful and comprehensive roadmap so that you are able to focus on those areas that will have the biggest impact.
It’s Your Legacy – Capture It!
Your business is the culmination of years (maybe decades) of hard work and sacrifice and the final stretch may be the hardest because you can get tired and just be ready to move on – but the time is now to make the most of all of your work and get the payout you deserve.
Whether you are funding your retirement or just getting ready for your next challenge, don’t leave any money on the table.
The truth is that there is more that can go wrong or be left unsolved during the sale of your business than at almost any other time ultimately costing you potentially hundred of thousands (if not more) in lost valuation.
There are powerful tools and insights you can leverage to make sure that you are not just on the right track but safeguarding yourself and your family as you move into the next stage of your career and life.
In addition to our packages, we also work 1 on 1 with a few select clients to help them through the entire journey for those that are looking for the fastest and best possible results. If this sounds like something you are interested in, please contact us here to apply for consideration.
We look forward to being a trusted and indispensible partner as you take this journey and finally get paid for all of your hard work and sweat equity!
Ready to learn more about how you can develop yourself and your business into the experience you want it to be?
