By Elon Block
I had a conversation with a client yesterday who just discovered he wasn't going to be able to
sell his business, at the number he hoped for.
A little background:
We have only been working with him for 4 months. The original plan was to help him increase
his sales and profits and improve his paycheck.
Basically, he wanted to put systems in place to accomplish the following things:
Increase the sales from $650,000 to a million dollars per year Maximize the gross profit Phase himself out of the day to day business operations He is currently one of the two service advisors and was in the process of interviewing
His goal for selling the business was 2019.
To make a long story short, two weeks ago, he found out that due to an unexpected
family situation, he must sell immediately.
He was shocked to find out that his business is not worth what he hoped to get out of it,
mostly due to a number of factors discussed in these articles:
The number one factor that decreased the current value of his business is described below:
To be valuable to a buyer, your business must be able to succeed and grow without you at the hub of all activities, and your employees must be more than mere spokes that cannot operate independently of you. And the more your customers need you and ask for you personally, the harder it is for you to scale back your hours, take a vacation or eventually sell your business.
Your business is significantly more valuable if you are successful at building a “brand,” not simply a place where your own reputation and your personal handling of customers is what brings them back. It’s the difference between thinking of yourself as having a “job” that requires you to show up at work to make money, versus creating a “business” where the brand is more important than the personality of the founder.
The majority of buyers who contact me don’t want to be a slave to the business and work every hour that the business is open. In fact, many buyers already own a business and are looking to supplement their income by purchasing an additional business where they will provide part-time supervision and marketing and business acumen. These buyers will pay a premium for a business that can clearly demonstrate its ability to run profitably without the seller as the critical hub.
It's interesting to see Art's current listings and see how the performance numbers
relate to the listing price for the businesses:
What are your thoughts on the sellability score Art talks about, in his articles?
By Joe Marconi
I was attending a recent TECH NET council meeting a few weeks back and one of the topics discussed was Exit Strategies. One of the members spoke about finding a key person in your company, if there is no one in your family to consider.
There are many shop owners out there that are near retirement. It would be a good idea to share a few ideas. I know many shop owners may not even have a plan. My lawyer approached me about a year ago and insisted that I sit down with him to plan out my future. I am 59, been in business for 34 years and been in the auto repair business since high school. If your story is similar to mine, it's something we need to start planning.