Are you on track to meet your business goals for 2013? What are your goals for 2014? How often do you actually write down your goals for the coming year?
I find that business owners generally do have predetermined revenue and/or profit targets. While those are important, there is another goal that can have an even bigger payoff: building a sellable business.
You may say that you are not ready to sell. That’s not relevant. Here are five reasons why building a sellable business should be your most important goal, regardless of when you plan to exit your business:
1. Sellability means freedom
A fundamental factor for determining sellability is how well your company would perform if you were unable to work for a while. As long as your business is dependent on you personally, there is not much to sell. Making your company less dependent on you by building a management team and creating policies and procedures for employees to follow means you have the ability to spend time away from your business. Think of the world of possibilities that would open up if you could choose not to go into the office tomorrow.
2. Sellable businesses are more fun
Running a business would be fun if you were able to spend your days on strategic thinking and big picture ideas. Instead, most business owners spend the majority of their day on the details: the government forms, the employee performance reviews, bank reconciliations, customer issues, auditing expenses, etc. The boring details of company ownership take the enjoyment out of owning a business. It is exactly these tasks you need to get into someone else’s job description if you’re ever going to sell.
3. Sellability is financial freedom
Do you check your brokerage statement each month to see how your portfolio is doing? You’re not necessarily looking to sell your portfolio but, you want to know where you stand on the journey to financial freedom. Creating a sellable business also allows you peace of mind, knowing that you’re building something that, just like your stock portfolio, has value that you could one day monetize. You can monitor your progress with periodic business valuations prepared by an independent business valuator.
4. Sellability is a gift
Imagine that your child has just graduated from college. As a gift you give him your prized 1967 Shelby Ford Mustang. Your heavily indebted child takes it on the road, but after a few miles, the engine starts smoking. The mechanic takes one look under the hood and declares that the engine needs a rebuild.
You thought you were giving your child an incredible asset, but instead it’s an expensive liability he can’t afford to keep, and nor can he sell it without feeling guilty.
You may be planning to pass your business on to your kids or let your young managers buy into your company over time. These are both admirable exit options, but if your business is too dependent on you, and it hasn’t been tuned up to run without you, you may be passing along a lemon.
5. Nine women can’t make a baby in one month
There are some things in life that take time, no matter how much you want to rush them. Making your business sellable often requires significant changes. A prospective buyer is going to want to see how your business has performed for the three years after you have made the changes required to make your business sellable. As a result, if you want to sell in five years, you need to start making your business sellable now so the changes have time to gestate.
To find out how sellable your company currently is and what you need to tweak to improve its sellability, take the Sellability Score via the questionnaire on our website. You can complete the questionnaire here http://sellabilityscore.com/vsp/jason-kwiatkowski.
To learn more about our VSP Exit Starter Program or to find out the value of your business, contact us at www.vspltdca.