As entrepreneurs, we tend to want it all, don’t we? We want to run our businesses our way, but we also want someone to take them over from us. We want to have the freedom to go on holiday, but we also want to be involved in every decision. We want to hold on to our businesses, and we also desperately want to sell them. 

According to Noam Wasserman’s study in the Harvard Business Review, four out of five entrepreneurs leaving their CEO positions in the companies they built are eventually forced to do so. Why? Because founders generally do not give up easily on the things they founded. Despite the fact that entrepreneurs know when it’s time for them to move on, they tend to hold on instead. 

Beyond the daily grind of generating profits, business owners aspire to create enterprises that continually appreciate in value. This means not only achieving financial success in the short term but also enhancing the intrinsic and perceived worth of the business over time. After all, a business that grows in value becomes an asset that can be leveraged for future financial security or even sold for a significant profit. And that makes the “letting go” part that much easier. 

Build today to sell tomorrow.

Most entrepreneurial dreams include the vision of an exit strategy that enables founders to transition out of the business when the timing is right. This could be to pursue other ventures, retire comfortably, or pass the business on to the next generation. Building a business strategically with the intent to sell prepares for this exit, allowing owners to capitalise on their hard work and dedication.

To achieve this dream, business owners must be forward-thinking and proactive in their approach to entrepreneurship. Building a business for sale is not the same as building a business and hoping it sells one day. Hope is not a strategy!

You’ll need to consider the long-term sustainability of your business, its scalability, and its attractiveness to potential buyers practically from the start. This involves making decisions that prioritise efficiency, growth, and adaptability while avoiding common pitfalls that could hinder a future sale.

When you are intentional about selling a business, you just do things differently. You’re not just thinking of what you’re doing on a day-to-day basis. You’re always considering what your actions today will look like to a buyer tomorrow.

Why would you put a speed bump on your own offramp? 

Ask any expert in exit planning and they will tell you that over 90% of businesses worldwide find themselves unable to secure a buyer. In essence, this means that those businesses eventually reach a point where they must either close down or dissolve. Not only does the owner miss out on the potential financial windfall they had hoped for, but the broader economic landscape also suffers. Jobs may be lost, investments vanish, and opportunities for growth and innovation go unrealised. Additionally, the years of dedication and hard work that went into building the business may feel somewhat futile when there is no successful transition plan in place.

The implications of these statistics are profound. They reveal a substantial gap between the aspirations of business owners and actual outcomes in the business world. It underscores the importance of understanding the complexities of selling a business and the need for a proactive, strategic approach from the outset.

If you were a road builder building an offramp from a highway, you wouldn’t put a speed bump right in the middle of it. Yet that’s exactly what many business owners do when they build their businesses: they put procedures and strategies in place that create huge problems for them when they are eventually ready to make their exit. 

Some of these “speed bumps” include: 

• Getting too involved in the business.

While it’s natural to want to be hands-on in your business (and at a start-up level, you probably have no choice but to be), excessive involvement can create a significant obstacle when it comes time to exit. Potential buyers may view a business owner who does everything as a risk, believing they could never replicate the owner’s level of involvement and expertise. 

Even if you opt not to sell but rather pass the baton to a business partner or family member instead, that person will be under tremendous pressure to absorb your knowledge base and step into your shoes. If they fail to do so successfully, your entire organisation can come crashing down. 

• Leaving at the wrong time.

Selecting the optimal moment to exit your business is an artful endeavour. Just as a seasoned surfer assesses the swell, timing, and positioning to ride the perfect wave, a business owner must carefully gauge various factors to ensure they are “riding the crest” when the time comes to exit.

You should always be on the lookout for favourable market conditions. This includes assessing the overall economic climate, industry trends, and the specific sector in which your business operates. A buoyant market with robust demand for businesses like yours can significantly enhance your chances of securing a favourable deal.

On the flipside, a stagnating market, disgruntled partners or an ultra-innovative competitor can take some of the shine off your business and make it that much harder to sell.

• Not knowing or understanding the value of your business.

Sale transactions in the business world can be intricate and multifaceted, and one of the most common stumbling blocks in the process is the challenge of reaching an agreement on price. This challenge is amplified by the fact that most business owners have not only invested substantial financial resources but also poured their time, energy, and heart into their businesses. 

The emotional connection to a business can be powerful and often clouds the negotiation process, particularly when a purchaser identifies issues or critiques the operating methods established by the owner.

To overcome these emotional hurdles and ensure a successful sale, it’s crucial for both buyers and sellers to approach negotiations with objectivity. This requires viewing the business as an asset in the market, rather than a personal extension of your identity.

Are you looking for an objective partner in this space? Speak to bizval.

Making critical decisions regarding your exit strategy requires a solid understanding of your business’ value. Whether you’re contemplating a sale, considering expansion, or planning for succession, having accurate insights into your business’s worth empowers you to make informed choices with confidence.

In addition, putting in the work to pre-empt a due diligence process and anticipate the major sticking points can be the difference between success and failure when a buyer knocks on the door.

As fellow business owners, we deeply appreciate the dedication, hard work, and passion you’ve poured into building and nurturing your business. We recognize that your business isn’t just a financial asset; it’s a reflection of your dreams, aspirations, and countless hours of effort. That’s why we are committed to assisting you in understanding the precise value of your business.

There’s no time like the present to take that first step towards unlocking the insights you need to secure your profitable exit. Scan the QR code above or speak to us at bizval and begin your journey. DM

At bizval, we are specialists in providing independent valuations to founders and entrepreneurs. Our proprietary methodology has been built based on decades of combined experience in the market, using investment banking techniques that are normally priced way out of reach of small and medium enterprises.

Visit bizval and empower yourself with the facts for the sale of your business