The way your business is organised may suit your working style now, but some structures can make it harder to hand over to a new owner and can even lose you money on a sale.
You may have a clearly defined organisational structure or you may have one that has developed naturally as the business grew. Either way, if you’re thinking about selling, it’s a good idea to consider how efficiently things work and what shape your business takes.
A hub and spoke business structure places you in the centre, with everyone else reporting directly to you and relying on you to make decisions. As business owner, you are the hub that holds the business together so you probably have a huge workload. In this structure, you will be in constant contact with your employees and clients. You might be the only person who knows how certain things are done.
While this business structure gives you the most control over your business, it also means that nothing can get done without you. It is difficult to step away or enjoy a long holiday. Business growth will also be limited because there is only so much time available each day.
When a buyer comes to look at your business, they will see this as a problem. They may like your business and want to buy it, but their fear will be that sales and customers will not return after you sell up.
In the best case scenario, they will buy your business and you will need to continue working (for them) for a number of years until the risk of losing customers has been effectively managed.
In the worst case scenario, they simply won’t make you an offer for your business, considering that the effort required to change the business structure too great for the rewards.
In a traditional, hierarchical business structure, the person at the top of the tree delegates some of their responsibilities to the next tier of managers, department heads, or senior employees. Each of these will in turn interact with the following tier of employees.
This structure means you don’t have to make all the decisions yourself and you can rely on managers with specialist knowledge. You don’t have to know exactly how everything works as long as you have someone on the team who can take charge of that part of the business. It is necessary that you delegate and train your teams effectively. Abdicating responsibility without training and empowering your team is a recipe for disaster in itself.
A hierarchical business structure can enable more growth as responsibilities are divided between different groups and levels. You can add on new teams as the business changes. You will also be able to focus on the parts of the business that need you most while your team manages the areas they know best.
When a potential buyer looks at your business, they will be able to see you, as business owner, have already passed on the majority of your customer and supplier relationships to your team. The risk of customers leaving or sales dropping as a result of a change of ownership are minimised as a result.
Minimising this risk of reduced sales makes the business more attractive to a buyer. They are more likely to make you an offer and that offer is more likely to be one which is acceptable to you.
A matrix structure is similar to a hierarchical business, but it allows for more flexible links between the different parts. Employees whose roles bridge different departments might report to multiple managers.
The matrix structure also allows for horizontal links between teams or individuals. Rather than having to go through their managers, employees in different groups will be able to work with each other directly.
The matrix business structure is the most efficient and flexible option so it can be ideal for fast-paced sectors and businesses that include a variety of different roles and activities. However, it does put more responsibility in the hands of employees so it is vital that clear procedures are in place to ensure information is shared with everyone who needs it.
The matrix structure is not for everyone. You have to have trust in your team, empower them, and lean from any issues which arise. If a blame culture exists, this structure won’t work.
For investment buyers who are looking to take a strategic role post purchase but not get involved in the day to day running of a business, this structure can be appealing.
The best organisational structure for a business depends on its size and your plans for the future.
Many small businesses begin with a hub and spoke model, with one person making all the decisions and doing most of the work themselves. However, effectively delegating some of these decisions and duties to other people enables growth and allows more flexibility as the business changes.
Moving away from the hub and spoke model can also make your business more saleable. If the business is too dependent on you, it devalues it in the eyes of a buyer.
If you bring your business to market hoping to get top dollar but haven’t done the work to get your structure right, you are giving away value. But trying to implement major changes to your business structure can be difficult and they won’t happen overnight.
Give yourself time to make these changes. Your business value will be higher and your business sale will be smoother if you do. You will also have more engaged employees if you involve them and trust them in your entire business operation.
Under the name of Hub & Spoke, your company structure is one of the 8 key drivers of business value. To find how your business measures up in this and against the other business value drivers, take your own confidential Value Builder Score.
Many factors will determine when it’s the right time to put your business up for sale. Sometimes the deciding factor will be your own personal situation or the needs of the business itself. However, once you have made the decision to move on, it can also be worthwhile thinking about the best time of year to sell your business.
A profitable business can attract buyers at any time of year, but changes in the market and the number of people who are looking to buy can make a big difference to the sale. If more people are looking for businesses to buy then you are likely to get competing bids and that increase prices and the ability to secure a quicker sale. For most businesses there are a few key times of year when demand is likely to peak.
Selling Your Business in the New Year
The beginning of the year is one of the best times to put a business up for sale.
Jan 2021, is looking like it will be as unpredictable as the rest of 2020. Businesses across the country are still locked down or operating at reduced capacity and whilst we had hoped for an easing of Covid-19 restrictions, we have the opposite.
Business sales during 2020 have continued. Good, sound, profitable businesses have been selling. They may have taken a little longer to complete, but buyers are able to see past the effects Covid-19 have had to the stable business underneath.
Buyers who weren’t able to find the right business last year will be looking out for new opportunities in 2021, and that could be yours.
Even if you’re not quite ready to sell now, you can still take advantage of the positive attitude that the New Year often brings in by taking steps to prepare your business for sale. Take some time to get your books in order or deal with any issues that could lower the value of your business.
Get to know the local market so you have a better idea of how much your business is worth. Talk to an experienced business broker to find out more about the process, what support is available to help you sell and how long it is likely to take. If you’re planning to sell your business in the New Year, then Business Partnership can support you through the entire process, from getting the initial valuation right up until you complete the sale. Find your local broker who can guide you through the market during the New Year and beyond.
Customers are at the heart of your business so it is important to consider how the sales process could affect them. In order to get the best price for your business, you need to show potential buyers that you have a loyal customer base who will stick with them. You must also reassure these customers that they will continue to enjoy the same level of service under the new owner.
Good customer service is essential for a successful business. Customers who feel valued will want to return the favour by leaving good reviews online or telling friends and family about you. Customer service is what brings people in through word of mouth and then keeps them coming back for more. The relationships you build and the impact you have on your customers can also be a big part of what makes running a business worthwhile.
When it’s time to move on, these relationships and the reputation you have built up in the community can make your business highly attractive to potential new owners. It is one of the main reasons to buy an existing business rather than starting up a new one. Working with a local business broker is the best way to ensure that your reputation and links to the community are correctly valued and highlighted to potential buyers. Your broker can also ensure a smooth transition when you find the right buyer.
Selling the business will mean big changes for you, but with the right preparation it shouldn’t cause any problems for your customers. The best way to achieve this is to plan a gradual handover so that the new owner can take over your role as you step back.
An effective handover plan should include four key stages:
1. Sharing knowledge: write down everything the new owner needs to know about the business, including passwords, customer and supplier contacts, instructions for equipment, details of your marketing plan, and a step by step guide to what you do each day, month, or year. Letting the buyer shadow you at work can also give them a good sense of how you run things.
2. Training: show the new buyer how things are done and let them complete tasks under your supervision. You’ll be there to guide them and add any details that were missed out of your written advice. You can introduce the new owner to your customers and highlight any services that help you to maintain good relationships, such as providing reminders to regular customers or identifying individuals who need extra assistance accessing or using your business.
3. Handover: the new buyer should gradually take on your responsibilities. You don’t need to supervise directly, but you should still be on hand to answer any questions. By the end of this phase, the buyer should be ready to take charge. Your regular customers should now be familiar with the new owner and they should have all the skills and knowledge needed to provide continuity.
4. Support: make yourself available to answer questions or provide assistance after the handover, if necessary.
How long these stages take and how much support you need to provide along the way will depend on the scale of the business and the needs of the new owner. An experienced broker can get to know your business and then provide tailored advice on the best timescale and approach for the handover. At Business Partnership, we match businesses with the right buyers and provide support throughout the sales process to make the transition as seamless as possible.
Entrusting your customers to a new business owner can be difficult, especially if you’ve spent years building these relationships. However, it is important to remember that this won’t be an ending for your customers. A carefully-handled transition should enable the new owner to step in and offer the same level of service, preventing any disruption for your customers or damage to the brand.
Contact your nearest partner here to discuss selling your business.
Selling your business can be a huge change in your life, especially when you’ve been running that business with relatives or if it has been in your family for generations. Selling can be the right move for both your family and the business, but it’s important to consider the impact it will have on everyone.
The biggest difference when selling a family business is the impact that it can have on the relationships within your family. Many people feel strong emotional attachments to their family business, even if they aren’t personally involved in running it.
The ties can be particularly strong for multigenerational businesses. Older generations can feel upset that the legacy they have passed on will be leaving the family, while younger ones may feel guilty about allowing the business to leave the family. It’s important to take these feelings into consideration and to involve the whole family in the decision to sell. Taking some time to talk or finding a way to commemorate the business will help. Try recording your memories or donating some of the proceeds to a charity in the family name.
As well as the emotional implications, it is important to consider the practical and financial impacts on your family. Family members who work for the business may be staying on as employees, looking for new jobs, or considering buying out the business. It’s vital to keep everyone informed so they can make the right decisions about their own futures.
Money is always a sensitive issue but becomes more so when selling a family business. Suddenly, family who don’t work in the business can become very vocal and opinionated on value and deal structure.
Its best to get professional advice on board. A business broker will provide advice on value and deal structure. A solicitor will ensure that the proceeds are divided fairly to prevent future conflicts. So if you’ve not reviewed your articles of association or shareholder agreements recently, it will be worth taking a look.
Selling the family business can trigger conflict, but it can also be the best thing for you and your relatives. Aside from the financial windfall you might expect, selling can also be the right move if keeping the family business has become an obligation rather than a calling.
If the family has changed in its ambitions, interests, or location, then there may not be anyone to carry on the business. Selling up could enable you to take on new challenges, which could actually be more in keeping with your family’s entrepreneurial spirit.
If the business has been in your family for generations then you may be worried how this break with tradition could affect the brand and your family’s legacy. You may also be concerned about your employees and customers, especially if you have built long-lasting relationships with them.
Although its difficult to hand your family business over to someone else, it can be the best choice for the business. If so, a Management Buy Out (MBO) might be an option which is exactly what Excelsior Panelling Systems did.
A growing business might need someone to come in with new skills or capital in order to take it to the next level. You might not have the time or energy to do justice to the family business or might be struggling to change with the times because of the weight of family tradition. Bringing in new blood could reinvigorate the business to higher growth and end up with a smaller piece of a much larger pie.
You shouldn’t let family ties bind you to a business particularly if it’s no longer producing the returns your family needs or if it feels more like a burden than a blessing. If the family business is preventing you from following your own dreams or you feel you’re holding the business back, then get in touch with us to work through the options available to you.
Let’s be realistic, there are no guarantees when selling a business. You may not be able to find a buyer, sell within a specified timeframe or achieve the price you have in mind. But just like choosing the best estate agent to market your home, choosing the right broker to sell your business will offer you the greatest chance of success. Good business brokers will provide a hassle-free, personal service, based on years of experience.
We believe there are 9 ways in which brokers, like us, can take the pressure off you, when selling your business.
For both seller and agent, valuation is an essential first step. A chance for a reality check.
For the business owner it will give you a realistic idea of how much you could gain financially from selling your business. For the Agent, it brings reassurance that the business is sellable.
A good broker will always explain the factors behind the valuation, which should be based on market experience and fair reasoning.
We believe trust and transparency are key at this stage. Valuation is our chance to help you choose the service package that’s right for you and your business.
Following the valuation, your appointed broker should ask you all the questions a potential buyer may ask. For example, are any of your employees key to the running of the business and what licenses you hold.
The Agent will then use all the information they have learned to write the sales particulars, demonstrating the benefits of the business to potential new owners.
It is a real opportunity to start building that all-important emotional engagement between a potential buyer and your business. It is vital that any sales details are well written and presented, and always approved by the client prior to publication.
Once the sales details have been agreed, it is time to list your business for sale. Good brokers will have a number of different channels available to them and help you choose the right ones.
We use four different websites, plus specialist sector sites, where appropriate. We also offer guidance on selecting the right listings and manage these on your behalf.
Good brokers will use their experience and expertise to connect you to the right buyers. They will market your business for you whilst you get on with the day-to-day management and development of your business.
We have various tools at our disposal which include our monthly eshot to our entire database. This is made up not only of potential buyers, but with other business professionals. The Solicitors, accountants, IFAs and more who are continually speaking with business owners. They are a key part of our working network.
A good Agent will act on your behalf, using their experience to vet everyone who enquires on your business sale and weed out the non-genuine buyers. They will send out the sales details, make follow-up calls and gain feedback on your behalf, freeing your time in these early stages.
Once the genuine buyers have been identified, your broker will arrange for them to meet with you in person.
We can be present at the meeting, or advise you how to approach the meeting. The purpose of the visit is for the buyer to feel an emotional connection with the business.
Your Agent should follow up with the buyer/s after the meeting, to ask for feedback and see whether they would like to take their interest to the next level.
All offers will come through your broker and they will know what you’re willing to accept or decline, and be able to negotiate any counter-offers on your behalf.
Once a sale has been agreed in principle, good brokers will produce what is known as a ‘Heads of Terms’ document. It is not legally binding, but makes life much simpler, setting out the agreement reached when the sale eventually passes to your solicitor.
As a seller you will naturally want some reassurances from the buyer, perhaps to request a letter of intent from the buyer’s lender, or proof of funds such as bank statements. Your broker will handle these requests on your behalf and continue to offer guidance as the sale progresses.
As completion nears, good brokers will remain in close contact with you, your buyer and both solicitors to ensure the deal completes to time and without any hitches.
They’ll act as a calm and steady influence throughout the whole process.
If you would like to sell your business with confidence, please get in touch.
Experience in business has value, but the longer your business is out there, the more risk you expose it to. This is why timing is critical when it comes to selling a business.
People’s attitude to risk changes as they get older, and this is also true of business owners. A natural conservatism seeps in and makes them more risk-averse.
The whole business of risk can become tiring, including having the time to fix issues and react to the threat of risk. This can then feed into thoughts about retirement and a change in lifestyle. Also, the fact that the business might feel more under threat adds to this sense of needing greater security, perhaps at a time when the business owner has a desire for more freedom.
When someone first starts a business, they are more likely to embrace risk as a necessary element in building business value – without exploring opportunities and taking chances the business is unlikely to grow.
The problem is, that while this helps build business value, when it comes to selling, the owner wants liquidity (cash), and if the business is run more cautiously by that time, it may be in danger of stagnating. So, less business value will mean less liquidity.
Caution can cause growth to slow, but a business that is growing, thereby demonstrating a better future, is of greater value to a buyer than one that is stagnating.
The time you choose to sell your business is vital. On one hand, you need to be aware of how your business has grown and what its current vulnerabilities are resulting from this. On the other, you want to ensure that you have built sufficient value in your business to sell it at the best possible price.
‘Going for a song‘ should be no-one’s ideal price, whether you are a business owner or acting on behalf of one.
Business owners, whether serial entrepreneurs or would-be retirees, should always be looking at exiting their investment because this is intelligent business thinking.
The key is in preparation. Structure your business in such a way as it can build and retain value. Monitor its financial performance and maintain its growth potential. Make it into a unique selling proposition by knowing what matters to your customers. But remember to get your timing right.
If you would like to build and retain value in your business, whether you are selling or not, please contact your local partner.
When is the right time to start thinking about leaving your business? Have you even considered it? If you have, then do you have a clear strategy in place? Would you even know how to go about realising your company’s true value? In this blog we talk about the essentials of exit planning.
You’ve spent a lot of time building your company, investing blood, sweat and tears into creating something that you are passionately protective of. However, the time will come when you’re looking for a new venture, want a better work/life balance or are ready to retire. Whichever reason, exit planning is a necessity if you are to maximise the saleability of your business.
A properly prepared business sells, on average, for 71% more than it would without any fore-thought or planning.
Here are some fundamental considerations needed when building your exit strategy.
If you’re starting to build an exit strategy, you are looking for someone to purchase the business. Consider what perspective buyers will be looking for when evaluating a potential buy out. What are they going to base their valuation on? Does your business have scalability and a forward thinking strategic plan? What is your business actually worth to them?
The most basic requirement buyers will be looking for is a profitable return on investment. Consider how profitable your business currently is. The common pitfalls of business sales stem from owners being unaware of the true value of their business. Do you know your true EBITDA, your asset value, your overhead costs etc.?
With 80% of businesses failing to sell, an exit strategy must be carefully considered, with a focus on what your buyer is looking for and whether they can see a future in your business.
If your business is part of a breakthrough industry you could strike gold. Buyers seeking to purchase aren’t looking for a carbon copy. They’re looking for exciting potential and a solid USP. As part of planning an exit, you will need to consider how easy it is to replicate, and how diversified, your products and/or services.
Easily replicated businesses become de-valued and end up fighting a discount price battle with competitors. Being able to purchase a company with unique services or products, and a varied portfolio, will be more appealing to buyers, as they will be able to see greater scope and opportunity.
Is your business ‘self-sufficient’ in its current state? Consider your exit. If you are looking for a new venture, want a better work/life balance or are settling into a well-earnt retirement, would the new business owner be able to continue running the business based on the solid procedures you have in place? Have you got effective quality and organisational systems underpinning your business?
Buyers might insist on conditional offers, basing these on future business performance. If your business relies heavily on you, now is the time to tighten up your procedures. Start removing yourself from each decision process, spreading the responsibility within your company. Have an effective management operating system that puts the onus on system control rather than any individual.
The average business sells for 71% less than it should, with only one in five businesses making it to sale. Your decision to sell may be one based on need, due to illness or emigration, or one based on extracting a healthy pension pot. Whatever the reason, plan your exit as far ahead as possible, and ensure that you have a robust exit strategy.
Your strategy should take into consideration a timeframe, giving ample time to focus on any underlying issues in the business, tightening processes and ultimately adding value.
The typical time to sell a business is 12 months, but planning your exit strategy should ideally start five years before you are ready to sell so the changes you make have time to show through in your profits. How much time do YOU need for your exit and what is the figure you’re looking to sell for?
Whether long or short term the decisions you make today will affect the value of your business when you are looking to sell or plan your exit strategy.
No matter the reason behind your decision to exit, contact Business Partnership today. We take confidentiality seriously and would welcome a conversation to assist you with strategic exit planning. And don’t worry if you haven’t got 5 years before you sell, there will still be things we can work on in the short term that will have a positive effect on your business sale.
Not all business sales go to plan. They take time, but if you begin to feel left out on in the cold, with a general lack of communication or activity, it’s time to get your sale back on track.
In this situation, timing is critical, read on for some helpful advice.
Firstly, don’t panic or think the worst. Silence doesn’t necessarily mean the buyer no longer wants to purchase your business. There could be a simple and honest reason why the sale has stalled.
Sometimes life just gets in the way. How many times in your life have your priorities changed due to unexpected events? We’ve seen sales stall due to a buyer falling ill, taking a holiday, or a change in their personal circumstances. Often, all it takes is a few phone calls to understand the reasons for the silence and get the sale back on track.
Having identified why the sale has stalled, consider if you’re the best person to get involved in resolving issues. Vendors can often be too emotionally involved in their business to see the situation objectively. Yes, you have the best interests of your business at heart, but could you end up confusing matters further? A neutral party like a business broker might be better placed to take action.
The moment a sale breaks down is when the true value of appointing a business broker comes into play. Your broker will have had numerous conversations with both sides in agreeing an offer to begin with, and will use their negotiation and diplomacy skills to optimum effect. Part of their role is to keep the sale moving and they will investigate on your behalf the reasons why things aren’t going to plan.
As soon as you accept an offer, agree a deadline for completion that your accountant, solicitor and business broker, plus any other important parties such as your landlord can achieve. This will ensure everyone is heading in the same direction. Don’t make promises you can’t keep! Communicate accurately and always deliver what you say you will when required. Keep all parties in the loop at all times as you head towards completion day. A breakdown in communication is a common factor in stalled sales.
Another reason why business sales break down is because something simple has not been delivered. You, your broker and other professionals need to stay on top of key actions and delivering essential documentation such as management accounts, supplier and employee contracts, to guide your business to a successful sale. Business sales can stall for all manner of reasons. Quibbling over ownership of a web domain is one challenge that is becoming more common. Get your documents in order so you know who controls what.
Working together, vendors and business brokers combine knowledge and experience to support a business sale through to completion. There will be instances where a sale cannot progress to completion, but we’re happy to say, in our experience such cases are rare. If this happens to you, get your business back on the market quickly and always have a binding confidentiality agreement in place with your original buyer.
If you’re looking to kick-start your business sale and would like more advice to get it back on track, please get in touch for a no-obligation chat.
The Covid-19 pandemic has had a huge effect on everyone in 2020, but it will continue to have longer-term effects as governments look for ways to address the unexpected spending and lost income, they have faced this year. One possibility that has been discussed in both the UK and the USA is increasing Capital Gains Tax to boost the public finances. If this goes ahead then it could have significant implications for business owners who are thinking about selling.
Capital Gains Tax Increases
Raising Capital Gains Tax is one of the options that the government is considering in order to cover the costs of the Covid-19 pandemic. A recent report from the Office for Tax Simplification (OTS) suggested that an additional £14 billion could be raised by making changes to the tax. The recommendations included doubling the rate of Capital Gains Tax to bring it in line with income tax while also reducing exemptions. While such dramatic changes to the tax system are unlikely to happen immediately, the government will be considering how they can generate more from Capital Gains Tax. Smaller changes to the system may be more likely. Increasing Capital Gains Tax, perhaps to a flat rate of 28%, has been discussed for a long time and the current situation may provide the impetus for the government to act.
How Could It Affect Your Business Sale?
Changes to Capital Gains Tax could have big implications if you are planning to sell your business. The amount you pay on capital gains is currently determined by your income, with only those earning over £50,000 a year paying the highest rate of 20%. In addition there is Entrepreneurs relief – reducing capital gains to 10% of the 1st £1m of gains on a business sale. Until March 2020 this relief was up to the first £10m, so the Government have indicated they are not afraid to change this tax.
Overall Capital gains rates are lower than for income tax because gains are often accumulated over a long period. If you’ve spent years building up your business before selling, it doesn’t make sense to tax you at the same rate as the income that you generate every year. The effects of increasing Capital Gains Tax would be particularly hard for small business owners (i.e. abolishing Entrepreneurs relief) as it could dramatically cut the cash retained when selling up – often a vital component of their pension.
Is Now the Right Time to Sell Your Business?
The risk of an increase in Capital Gains Tax could mean that it is better to sell your business now rather than to wait until the rates rise. However, it is unclear when or if the Government will increase Capital Gains Tax, so this shouldn’t be the only factor you consider, especially if you weren’t planning to sell for at least a few years – the tax tail should not wag the commercial dog. Indeed, it could be better to wait and risk paying more in taxes if you increase the value of your business over the next few years, as long as the value growth outweighs any increase in taxes.
It is also worth considering what you will be doing with the proceeds. An increase in Capital Gains Taxes could also affect any investments you’re planning to make in the future, as you will pay tax on the profits you make from these too.
In conclusion, whilst an increase in Capital Gains Tax could be on the cards, which could mean selling your business now rather than later is better, it’s important to look at the bigger picture of what your business could be worth in the future.
Fortunately, you are not alone. At Business Partnership we can help you understand the current value of your business and what it could be worth in a few years, to help you judge this vital decision.
You can either take one of our Value Builder Scores or speak to your local partner – just enter your postcode here and we will do the rest?
The right timing can make all the difference when you’re selling your business. It can ensure that your business is on the market when it has the best chance of selling for a high price. Getting the timing right will also ensure that selling up is the best thing for both you and your business.
After investing so much of your time, money and energy into your business, you will want to ensure that you get the best possible price when you sell. The current market mayhave a big impact on the value of your business so it is important to check it out before selling. You can start by looking at listings and recent sales of similar businesses in your area to get an idea of how much you might get and how long businesses are staying on the market. If businesses are selling quickly then it indicates that there is plenty of demand and there should be buyers out there. If sales are slow or prices are lower than you hoped then you might want to wait a while before selling. Even a few months or a change in the seasons can make a difference to the market, especially during uncertain times.
One of the most obvious risks in selling your business is that you might not get as much as you believe it is worth. Many different factors can affect the value of your business and they can fluctuate over time. When you sell your business, you will be hoping to get the best possible price, but there is a chance that prices could go up after you’ve sold.
However, there is another side to this equation that is also worth considering. The current state of the market or of the wider economy will also affect your plans for the proceeds of the sale. If you’re about to start up or invest in another business, then you might be hoping to get a bargain while prices are low. If you’re planning to retire or invest your money elsewhere, then you’ll be hoping for growth. Waiting too long to sell your business in order to maximise the immediate profits could mean that you risk missing out on these opportunities. You will need to balance these risks depending on your own situation and future plans.
Researching the market for yourself can give you some idea of what to expect, but things are always changing and your business is unique so it isn’t always easy to compare it to others. You can get a more accurate idea of what your business is worth by talking to an expert who is familiar with the local market.
External risks associated with the market aren’t the only ones to think about when selling a business that you’ve put so much time and effort into. You may also be considering the risks to the business itself.
On the one hand, your business is your legacy, something that you’ve helped to create and cultivate into what it is now. Even if you’re ready to sell, you will still want to see it succeed, especially if you have employees and customers who depend on you. Getting the business into the best possible shape before the handover is the best thing you can do to ensure its future success when you find the right buyer, but you will always be taking a risk on them.
Although it can be difficult to pass over everything that you’ve built up to another owner, it can ultimately be better for the business. Business owners need to be ready to take risks in order to grow or adapt to changing times. However, as we build up our businesses and the equity that we hold in them, it can get harder to take these risks, even when they are necessary. This is especially true when you’ve been running the business for a long time, have more family responsibilities, or are nearing retirement and unable to risk your nest egg. We naturally become more risk averse as we get closer to selling. At this point, it can be better for the business to be passed on to a new owner who can take chances to bring the business to the next level.
The current market will determine how much you can get for your business, but it isn’t the only factor to consider when deciding when to sell. For many business owners, the deciding factor will be their own personal circumstances. Maybe you’re thinking about selling because you’re ready to retire or moving on to a new challenge. Getting the timing right for yourself can be just as important as thinking about the current market. Since you’ve put so much into your business, you may also be wondering whether the time is right to pass it on to a new owner. You can’t control the market, but there are a few things you can do to ensure your business is ready to be sold.
The simple truth is however that you can never align all the stars – the strength of the market, your business and when you’re ready. So, all you can do is prepare the business to be ready when you’re ready to sell and doing that right will make it attractive to buyers, thus countering market forces.
Fortunately, at Business Partnership we can help you to gain a deeper understanding of what makes your businesses valuable today and prepare your business to be ready when you are. Just take one of our Value Builder Score or speak to your local partner – just enter your postcode here and we will do the rest?
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.