We can say with certainty that, at some stage in the future, you will not be running your business. So whether you plan to sell or pass it to family; now is the time to ensure that your business isn’t all about you. The latest research of 2300 companies from the Sellability Score* provides two key factors that are linked to the probability of getting an offer for your business when it’s time to leave.
1: You’re almost twice as likely to get an offer if your business can survive the “walk under a bus” test.
Ask yourself, “If I am out of action for three months and unable to work, would my business keep running smoothly?” The more your staff and customers need you, the less valuable your company will be to a buyer or even a family member (they know more than most how the business relies on you!). Try the following:
- Spend less time at the office. Start by not working evenings or weekends, and don’t reply if employees call. Once they get the picture, the best ones will start making more decisions independently;
- Keep a list of questions asked by staff, especially after your absence.
These will expose your weakest employees, the ones that need training (and what that should be) or that need to find another job.
As for you, it might come as a shock to find out how much your business has become such an essential part of you. However if you’re going to leave your business one day, you need to look at it as an way of making money, not as something that defines who you are.
2: Companies with a management team (as opposed to a sole manager) are getting offers at almost twice the value.
If you don’t have a management team, hiring a “right hand” is a good first move. A second-in-command can help you balance the demands of running your company and will advance your targeted exit time.
Here’s a four-step plan for hiring a right hand man (rhm), and thanks to advice from Silicon-Valley-based Bob Sutton, author of Good Boss, Bad Boss, for these views.
a: Identify someone internally. “The research is clear,” says Sutton. “Unless things are totally screwed up, internal candidates have a strong tendency to outperform external leaders.”
b: Give your rhm prospect(s) a special project, one that allows them to demonstrate their leadership skills to you and the rest of your team. If your candidate or one of your candidates excels, it will be clear to your team why he or she was selected.
c: Communicate your choice. If you pick a rhm from an internal pool, explain your choice to the rest of your team. At the same time, wrap your arms around those you passed over and make it clear how much you value their contribution.
d: Shift from manager to coach. “The transition from manager to coach is a gradual evolution where the goal is to ask more questions, spend more time listening, and spend less time talking and directing,” says Sutton.
Paul Dodgshon is a Regional Partner in Business Partnership, who have been helping business owners sell their businesses since 1979. You can learn more about Paul and Business Partnership here.
*The Sellability Score is a cloud-based software tool that allows a business owner to assess the “sellability” of their company. The researchers at The Sellability Score analyse the data from 2300 companies in a variety of countries to understand trends in the business market, with a special focus on how privately held owner managed businesses sell.