Set Your Business Up For Sale By Allowing It To Run Without You

sell your business

Posted On July 9, 2021 by Brentwood-growth

Deciding to sell your business is a big decision, but preparing the business for the sale can sometimes take years. There are many factors that must be considered and executed to be certain that the sale will hold up in the due diligence process, and that the highest sale value is obtained.

One of the hardest issues we must deal with when selling our business is pulling back from the day-to-day operations of the company. This can be a very difficult process, not only because of all the blood, sweat and tears we’ve put into it, but also because this has been our lifestyle for many years – working at all hours and wearing many hats whenever necessary.  We will have a hard time relinquishing control and may believe that no one can perform certain functions as well as we can.

All of these factors may be true, but the problem is – if we are truly the only one that is able to run our business, we can potentially harm its value. Try to see this from a potential buyer’s perspective: if everything runs through you, the owner, what happens to the business when you are no longer there? There is tremendous risk from a buyer’s viewpoint with this and they will want to discount the price of the business as a result because In order to sell this business you’d have to find someone exactly like yourself with the same skill set, but 25-30 years younger. And that’s like finding a needle in a haystack.

You, as the owner, must identify what your personal objective for the business is. If it’s a cash flow and lifestyle business, then you may never need to sell it. If you want to prepare the business for a future sale, then you need to develop a process and a team where the business will flourish without you. It is counterintuitive to some degree. Major functions and areas of responsibilities need to be handed off. Your ultimate goal is to become redundant and replaceable.

Below are suggestions as to how this might be accomplished over time:

  • Keep your direct reports to no more than five. With your other responsibilities and the amount of time you should spend with each, this is a full plate. This will force you to delegate and organize.
  • Organize around task functions and departments. Sales, marketing, operations, finance, technology and HR are all different departments and within each of these there are task functions. Start by organizing and delegating responsibilities.

 

Sell Your Business

 

  • Be clear around objectives, goals and vision. Have clearly stated goals and objectives where everyone understands what success is. If the team is guessing what you want done then they may or may not get it right. If your desires have been clearly articulated, they may fail on execution, but at least they will be clear on intention.
  • Start small and build. Assign various tasks to others and let them perform. Get things off your plate and start spending more time away from the office. Leave early, take long weekends, two-week vacations (maybe more?). This will give you and the team more confidence that the business can run without you.
  • Build process and automate where possible.  A clear process map will reduce the chances of error. If you can utilize technology and automate the process, not only are you increasing the likelihood of success but you also drive costs down – a double win.
  • Build a team. Build the best team you possibly can. Put your ego aside, stop thinking that you are the smartest in the room. Bring in bright, talented, passionate, younger individuals that you would trust with your life. Guide them, encourage them, mentor them – you set the strategy and let them carry out the plan. They will make mistakes, that is to be expected. Help them learn and not get discouraged.

Remember that the objective is to maximize the value of your business for a sale. Building a scalable business that can run without you is one area to consider. This is what buyers are looking for because it reduces the risk upon your departure and allows the highest sales price. Keep the end game in mind.

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