Welcome to the Building a Sellable Business podcast series. Within these 40 or so episodes, I’ve created a roadmap small business owners can follow to drive toward their destination called “Success.” We will travel along the journey of building value, and ultimately selling a business… for profit. I’m going to outline some of the most efficient routes I found while working with hundreds of small businesses like yourself that could help you maximize your time and money. On the way, I’ll highlight fuel stops you can take to increase your company’s value if they apply to your industry and organization. I’ll show you how to work on your business so that you don’t waste time working in your business.
Let’s make this easy, or “financially simple” if you will. Let me show you the steps that will up the chances of a successful sale of your business, and let’s get there quickly and profitably.
My goal for this series is simply to walk you through the journey of starting, building, and ultimately selling your business.
If I want to take a trip, I’ll begin my travels with an end destination in mind. In order to leave my house in East Tennessee and get to Oregon, I know to head West, but I’d need detailed directions from my GPS to outline the quickest route possible. Because of the distance between Tennessee and Oregon, I’m more than likely going to run into delays and problems somewhere along my path – wrecks, construction work, road closures, storms. Inevitably, my GPS will reroute me and get me to my final destination.
Mapping out directions for my trip is no different than you directing your business, folks. It’s a matter of knowing what you want to happen at the end of your career. Are you building your business to pass it down to the next generation? Or are you growing your company to sell it for profit? Do you hope to sell a lucrative business to your employees or to another entrepreneur so that it will continue into perpetuity?
The whole idea behind this blog and podcast series is to help you understand the purpose of your business so that you can sell it for profit. Surely you don’t want to make just enough money to get by while you run a company. Don’t you want to make tons of money while you work and then make millions of dollars when you retire? Is that even possible? Is it actually possible for you to build a sellable business?
According to the Exit Planning Institute, or the EPI, 80% of companies below 50 million dollars in revenue never sell. 80%. That’s crazy! Another statistic tells us that only 30% of family businesses survive into the 2nd generation. Do you understand that? There’s only a 30% chance that you will pass your business down to your children! What will happen to your company then?
How about this revelation? 75% of the business owners (who make less than 50 million dollars) who actually sell their business aren’t even happy that they did after all is said and done.
And another revelation – three out of four companies will be changing ownership in the next ten years. Wait a minute. Why are 75% of businesses changing ownership so soon? Well, the Baby Boomers who wanted to sell or get out of business years ago ran into the economic collapse of 2007 and 2008. They couldn’t get out profitably then, so they’ve been holding onto their companies until they could recuperate a profit or until they’re just too old to continue.
If you are like me, these business exit numbers are dismal! What is happening between a company’s beginning and its end to make it unsellable? Well, only 25% of business owners have a basic financial plan. Only 25%. That’s pathetic to me. Is there a correlation between not having a business plan and difficulty selling in the end? I believe so! And here’s a big problem with that. 80% of business owners’ net worth is tied up in their business. Let’s think about this for a second. If you’re a business owner, chances are that 80% of your net worth is tied up in an asset that is only 20% likely to sell in the end. That’s terrible and I am devoting this series and my first book (The Ultimate Sale) to changing this.
How do these awful stats make you feel? I for one don’t want to be in the 80% of owners who start a business, put their entire life’s assets into the business, bust their butts growing that business, and then walk away from the business unable to sell it. That’s like having a rental property that provides you with monthly money, but you give it away in the end. It’s like having a dividend stock or CD that provides you with an income, but you never own the asset. The asset isn’t worth anything other than the monthly dividend earned from it. I don’t want my company to end like that, and I don’t want yours to dissolve away like that either.
Join me as I continue down the path to your business’ sale in our second article: Selling your Business, Starting at the End