How to structure your business for maximum Sales Value at retirement?
Many entrepreneurs run amazing and highly profitable businesses. However, that doesn't necessarily translate into a business that can be sold to someone else. For example, a coach that works alone has nothing to sell. In this case, "their expertise" is the entire business.
As you work hard to build your business, make sure that you are building it in a way that allows you to sell it at retirement.
If you currently own an unsaleable business, there may be things you can do to change that. It is wise to create a business that will sell for the best price in the future.
Take advantage of the following strategies and structure your business so it is attractive to potential buyers in the future:
Ensure your skills are not the only value in your business. If you are the only income stream, you are strongly limiting your ability to sell your business. What can you do? For example, if you are a lawyer, build a business large enough to permit the hiring of other lawyers.
Over time, remove yourself from the income producing activities. Some business buyers are looking to purchase a company that allows them to create a full-time job for themselves. However, many would rather just be investors. They are looking for a business that can be run from afar, with minimal time demands.
Here are a few questions to guide your thinking :
Keeping the other items in mind, how can you effectively reduce your workload?
Imagine if you could only work 20 hours a week. What changes would you make to your business? What about 10 hours a week? How could you restructure it and still be profitable?
Project future income. Potential buyers are interested in the amount of income they can expect to earn. Even if Profit is more important than Revenue in my eyes, many businesses sell for multiples of the expected annual income. Anything that can be done to boost your sales and profitability will increase the sales price of your business.
Derisk your business. Buyers also want to know how much risk is involved in earning that income. Is the business in a field with growing competition? How long have the most lucrative clients or customers been on board? How much debt is the business carrying?
Assess the business' potential. What are the long-term prospects for your company? Is it a business that can grow in the future? The more potential your business has, the more you can get for your company at the time of sale.
Business brokers are sometimes willing to give advice for a small fee. Find a business broker with experience in your type of business and get advice on what potential buyers are looking for. It is in his interest to make businesses "easy to sell"!
With some planning, your current unsaleable business could be worth a lot of money when you retire. Get some expert advice and structure your business and value-producing activities to make your company attractive to buyers. Activate your Magician and Warrior archetypes : When it comes time to retire, you will be glad you did!