The Business Owners’ Special Series (B.O.S.S.) No. 24
Business owners recognize the value of being proactive, they reward preemptive behavior in their employees and look for ways to be ahead of the curve when attracting customers. However, when it comes to the value of their business and enhancing that value, business owners are often reactionary and do not think about business exit solutions until it is much too late.
Business owners like you need to take on a proactive mindset towards enhancing their business value for a variety of reasons. It is possible you may be approached unexpectedly with an offer to buy your business. But you should know, that no matter how good an unsolicited offer is, it will be less than it could have been if you do nothing to prepare for a successful business exit before a buyer knocks on your door.
If you do not, you can expect your business to sell at a huge discount, and without proactive business exit solutions, you may not even realize it. So now is the time to focus on enhancing your business value and maximize your business exit value.
Innovative Business Exit Solutions
If you are like most business owners, you may think you should wait until you are ready to sell before focusing on how to find business exit solutions. While this is common, it is also a big mistake.
Owners may know when they want to sell, but they really do not know when they will sell. The majority of business sales take place when the owner least expects it and therefore is totally unprepared for sale. There are many reasons why you may have to sell when you do not expect to, including the premature death or disability, financial distress in the business, or – as many business owners experienced in 2020 – drastic changes in the industry, the economy and/or technology. And let’s not forget the unsolicited offer from a buyer.
If you are waiting until you are ready to exit before you focus on your business value, you will be among the majority of business owners who sell when they are unprepared to do so. If you have not taken the time to prepare for your exit (deciding how and when), have not developed an action plan to enhance your business value and have not prepared for buyer’s due diligence, your business will likely fail to sell, or there is a good chance you will sell it for a discounted price.
Whoever started this ill-advised mantra that exit planning should begin when you are two or three years away from selling your business is doing business owners like you a huge disservice. Since the majority of business owners sell their business long before their target date, you may exit your business long before that three-year clock starts ticking.
How to Start Enhancing Business Value Today
There is an added benefit to thinking about ways to enhance your business’s value before you start planning to sell the business, as this process often results in increased operating efficiencies.
The earlier you create these operating efficiencies, the longer you can benefit from them directly. This planning should result in improved financial performance, as greater efficiencies typically lead to larger profits while you own it, and lead to a greater price when you sell it.
Exit planning should not only benefit a buyer, it should also benefit the seller, and for as many years as possible. The more time you have to execute a plan, the more value you can add to your business while you own it.
By being proactive, you can enhance your business value in such a way that makes timing irrelevant. Enhancing value can remove risks that would cause a buyer to discount the price they are willing to pay for your business. It also means your business ideas become the systems in your business that maximize efficiency and performance, so your business does not depend on you to make it run. A business that has maximized business value is ready for sale no matter the circumstances of that sale.
Value Acceleration 101
Our business exit planning process is called Value Acceleration, because it is not merely focused on a single transaction in the immediate future. It is a process that starts now, and helps ensure owners like you are primarily focused on building value and making your business exit ready at all times. Our team also helps you become financially ready to exit, and emotionally ready to let go. Value Acceleration is an owner-focused, step-by-step process that provides an action plan for the business owner who wants to maximize business value and be exit ready at all times.
Rich Gunn leads BPM’s Value Acceleration Service Team, which helps with succession planning, transition business exit strategies and exit planning for business owners. Rich is a Certified Exit Planning Advisor and a member of the Exit Planning Institute.
The Business Owners’ Special Series (B.O.S.S.):
The Business Owners’ Special Series (B.O.S.S.) is a library of information for business owners who are proactively seeking guidance from experts on how to implement value acceleration in their business. Be sure to keep reading, if you desire to develop your business to its maximum potential value and gain an understanding of how and why beginning the process sooner results in building greater value.