If you're a business owner and you're growing with an eye towards handing off the business or selling it, or just want to grow your business, Business Seller Center is the place for you to get the information you need to maximize your profit.

Why run a business like you might sell it someday? Well, number one is that you will exit your business. It happens to everybody, from death or disease, or just you get tired of it, or you do a strategic exit, and you take alot of money off the table, but everybody exits every business at some point. So that's going to happen. But if you grow your business and you run your business with an eye towards the next owner, that helps you grow your earnings, and it allows you to step away and enjoy your life in the meantime.

And then when it's time to sell your business, it's worth a whole lot more. So, a business that can generate earnings without you behind the wheel and driving the business all the time is worth a lot more than a business where you're indispensable, where the buyer basically is buying your job versus buying your business. That's a big distinction that the buyers are going to be looking for.

Time Exiting Your Business

So quick notes about the timing. The best time to think about exit strategies and exit preparedness is when you start your company and if you didn't do it then the next best time is to do it now. And the worst time to be thinking about going to market is when you think it's time to sell or something unexpected happens and you have to make a move quickly, you're going to leave a lot of money on the table.

So, you want to be doing some of this work in advance of it's time to sell now. And the more time you can work on the key-value components that we'll talk about here, the more your business will be worth at sale. So, if you have a couple of years runway to get ready, that's great, you know, the more time, the better. Though again, the more time you can work on this, the more valuable your business will be at sale. And then just a sneak peek of what's ahead. We're going to look at a bunch of different components of how to maximize your value, but number three is the Organizational and Operational readiness.

Document Your Exit

There's a big benefit if you take the time to document your company and your process: things are clearly outlined how you do your business and you have Standard Operating Procedures. This alone can add between a half to one-time earnings to your valuation and your sale price.

For example, if your business is throwing off a half a million dollars of earnings, that could be worth another 250,000 to 500,000 just by having a book that talks about how you do your business

The old way of going to market

Suddenly, you decide it's time to sell. You get a valuation. Usually, it's less than what you think your business is worth.You find a local business broker. And some of the challenges with selling that way are you haven't been thinking about the best buyers. You're just going to look for a buyer. You didn't plan and build your business to prepare to get the best sale price.

Don’t Use A Local Business Broker

With a local business broker, typically, they're just going to put up a listing in a lot of different places and find people that are looking to buy a business.

It's extremely passive. It's kind of like in real estate, you give somebody you’re listing for your home. Well, they're going to put it up on the MLS. They're going to list it. They might do an open house. They're going to do some stuff, but they're not looking for the best buyer for you. They're just looking for any buyer that's willing to pay the price. And again, they're leaving money on the table, leaving your money on the table. So, the better way is to have the buyer focus on everything that you do as you are planning on exiting your business. That way you might have buyers in five or six different markets that might love to buy your business. So how confident from the buyer perspective, are they that they will continue to receive these earnings? And can I grow this business? So, we're looking for the best buyer, not just any buyer, cause the best buyer will pay a premium for your business.

Five Keys for Exiting Your Business

So, five keys, just going to roll 'em out quick then we'll spend a little bit more time on them, is your

1. Timeline that you give for exiting your business
2. Financial Preparedness,
3. Leadership Readiness,
4. Organizational and Operational Readiness,
5. Buyer Focus.

Again, this buyer focus takes us into the marketing phase where we're going to be marketing your business to the best buyers, not just seeing who's ready. We might find a company that didn't even think they were in the market to buy a business and yet, they'll pay a premium for your business. So, I like to think about putting together this book that eventually we're going to create and we're telling a story. And with your Financial Preparedness, we really can't change a lot historically, but we can tell a better story about it. With the Leadership Readiness, that's really up to you.

And we can have conversations about that. With the Organizational Operational Readiness, that's something that we can work on and upgrade within three months to a year or two prior to sale that can make a huge difference in your valuation.

Key 1: Timeline to Exiting Your Business

Again, the Timeline that's up to you. The buyer focuses and thinking about the buyers while you're working on your business, the sooner we start doing that, the better. So, if we can work on all these things, change the story we tell, and improve the quality of the information. That's part of what we want to do. So again, we can't change the history, but we can share a better story about the future for the buyer. So, digging into each one a little bit.

Key 2. Financial Preparedness,

Before exiting your business, track your sales and earnings growth, looking at the strengths and weaknesses.

Recast the financials to highlight excess owner earnings that the new owner will get to enjoy and do whatever they want with so that's an important piece here. We also want to look at your Marketing and Sales history. To whom have you been marketing? What are you currently doing online, in the real world? How are you attracting new clients? What are your marketing partnerships? And this, we can also work on an upgrade. I've helped a lot of clients get into new markets. That really makes a big difference when you're going to market.

Key 3. Leadership Readiness for Exiting Your Business

Think about what makes it a good time to sell? It could just be that the market says it's a great time to sell. Are all your shareholders and stakeholders on board? That really matters a whole lot in terms of the readiness to do this process. Emotionally, are you ready? Do you know what's next? Are you just done and you ready to move on or are you ready to give up the reins and let somebody else take over the company for you? And are you willing to stay on a little bit? That could matter a lot. Some people want to do that to navigate a smoother transition for their clients: they've built up a clientele and they want to make sure they take care of them.

Key 4. Organizational Readiness

You are exiting your business so can the business operate without you? Are the processes and procedures detailed and are they followed? Many businesses have Standard Operating Procedures, but they're not followed so they're not worth a lot.

And again, the big benefit in having procedures well documented when your are exiting your business is that it really boosts your sale price

Key 5. Buyer Focus

Number Five is having that Buyer Focus in exiting your business. Look for synergistic buyers that want your customers and your process. There's something about your business, the people, the right buyers are going to pay a real premium for. That's synergistic buyers.

Also, the deal structure and the flexibility you might have.

There might be tax advantages to taking out payment or earn-out over a few years, might work out a whole lot better for you than just getting a big lump sum. But we're also going to develop a marketing strategy to reach these people. That again, they might not be in the market. They might not think that they're a buyer, but they could be the best buyers.

Again listing with a broker is just really, really passive. And then it's going to yield a low value of the sale price for you. And a lot of times they're going to just try to reach your local competitors. That's probably the worst place to try to sell. We want to develop a custom business-specific marketing plan to reach the best synergistic buyers, that's going to get you the highest value.

Selling your business for the most profit often means reaching outside of local business and buyer pool and looking to regional and national companies that may want to come into this marketplace. Again, they might want your business and they value you more than a local competitor might.

Business Seller Center Kevin F. Murray

The Business Seller Center employs innovative ways for exiting your business. For example, Controlled Auction instead of just putting up, oh, here's the business, We get the information to the right buyers, and we develop an auction process that can really help to find the buyers that really want to pay more for you and that can help bid up the price.

Now, a lot of what I've learned is from doing my own business. I built a company over 20 years where I started out up in Maine, expanded through New England, built the business in teams.

I had offices in Florida, Connecticut, and Maine eventually was doing projects across the country. By way of background, I went to school to study physics, believe it or not, at Worcester Polytech, worked with a solar company developing national dealer marketing programs, did my energy conservation business Sebago Energy. And about 20 years ago, I started EarthLight Consulting and Energize Your Business, which is all about helping companies grow and scale. And I've actually worked in 30-40 different industries using all the tools that I've developed growing my businesses to help other people grow their businesses. And in a lot of cases, get ready for an exit, a sale, merger, or acquisition. So, what's next is if you think you're close to exit and you're starting to think about that, or you like what we've talked about here, we want to accelerate the readiness, like get you ready sooner rather than later.

A big part of that is just looking at a historical financial review. Coming up with some ideas of valuation. We also want to look at your Operational and Organizational documentation. What do you have in place, review that, look at how we can upgrade that. The same with the sales and marketing. We want to think about other markets that you can reach while we're getting you ready to bring your business to market. We want to be thinking about how we're going to market your business to the potential buyers. We’ll start with having some conversations about why you are selling your business. We develop a Memorandum of Understanding that guides, the relationship. We begin our calls, the research, and the preparation. So, give me a call if this resonates for you, I'd love to help.

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