By Steve Sink, Owner, CBI, M&AMI
Do you own your own business? Overall, the business has done well, but you are starting to see your friends and family start to retire, or possibly your health is failing. Maybe you are ready to do something different with your career. No matter what your reason, it’s time to take action.
Be aware that buyers are always ready to acquire great companies. It’s the prep work before entering the market that takes the most time. If you’re struggling to find a place to start, begin by answering five simple questions.
Most business owners drastically underestimate how much time and energy it will take to strategically position their business. Most view selling like a light switch — when they’re ready, they’ll simply enter the market, close a deal, and walk away with a pile of cash.
In reality, that’s not the way the game is played. Preparing your business takes time, often two years or more! The key is to think strategically, ahead, and begin with baby steps. Trivial as these questions may seem, they’re important for setting the direction you want to go, and determining how much time you have to get there.
- How old are you? Whenever I ask this question, I always hope for the answer to be as low as possible. Ideally, I’d love to hear, “Rock, I’m 55 years old, and trying to prepare for retirement in 10 years. What do I need to do right now to make sure I get there?”
Unfortunately, that’s usually not the case. More often, it’s a 63 or 64-year-old who wants to get out within the next year or so. It’s time to put the pedal to the metal.
- What’s your health condition? It often takes some sort of a catalyst to make an owner think seriously about selling their business — and many times it’s health related.
That’s what makes preparing early so vital. I hate to say it, but you never know what could happen! One day, you could be at the pinnacle of health, the next day, you could have a serious health crisis.
Don’t let health dictate your future. Plan now while your health is good, so you have the time and energy it takes to sell your business. Speaking of which…
- What’s your energy level? Preparing your business is no picnic. If you wait until you’re 65 to begin the prep work, you might not have enough gas in the tank to round third and slide into home.
If your mental, physical, and emotional energy is high, that’s great! To be focused and disciplined, it takes everything you have, so it’s a great time to start planning. If your energy is deteriorating, start planning before it dwindles even more!
- Is money keeping you at your business, or do you have other interests? This is a loaded question. If you need more money before retiring, it’s probably not the right time to sell your business. In that case, you need to develop a strategy for the next three, five, or however many years to get you where you need to be to sell.
If you’re in the financial position to sell, think about your interests beyond your business. One of the biggest mistakes I see among business owners is that they haven’t prepared emotionally to leave their business behind. It’s the reason that 75 percent of business owners are unhappy in retirement.
You don’t have to settle for a retired life solely comprised of happy hour and golf (although there’s nothing wrong with that, if you so desire). Pick up a new skill or sharpen an old one. Try writing a book, jumping into photography, or travel the world! Whatever it is, make sure it’s truly fulfilling.
- Who is the ultimate decision maker? You might think it’s you, but are you sure? Conflict often arises, especially among family-owned businesses. I’ve seen businesses where one person is the owner, but their father is the ultimate decision maker, and of course their mom, brother, and two sisters are going to have their say.
Hash this out early. The last thing you want to do is start planning to sell your business, only to find out you don’t even have the authority to put your business on the market in the first place.
Preparing your business for the open market is an enormous task, but breaking it down into small steps can help you manage the chaos. Answer these five questions to get the ball rolling right now.
Is it time to sell your business, or figure out an exit plan or strategy?
Don’t wait — make the call today: 309-688-5050. Steve Sink is a Certified Business Intermediary, Master Merger, and Acquisition Intermediary. Visit phxaffiliates.com for more information.
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