Step 1
Set aside time to plan. Owners must redefine their position and accountabilities and shift daily responsibilities amongst subordinates. Good planning will take three to four hours a day for research. You must dedicate yourself to this process.

Step 2
Establish some baseline questions that a potential buyer might ask. Buyer questions might include:

• How important is the current owner to the business? This includes proprietary knowledge, customer connections-relationships, owner recognition to product brand, employee relationship, etc.
• Does this business still have any competitive advantages? Is there a value proposition that can be built upon, or does the business have stagnant or declining trends requiring a complete turnaround?
• Is too much of the business coming from too few customers?
• Has the company had trouble holding on to good employees?
• Have prices been reduced? Have margins slipped?
• Is the company’s scope correct? This means the company has the right number of products and services and the right size market. Does the company suffer from the 80/20 rule where 80% of sales or profits come from 20% of the products?
• Has this business been able to borrow in the past?
• Is this business paying its bills on time or might a buyer be looking at renegotiating with suppliers to reestablish new credit terms?
• Can this business be financed based on a reasonable down payment?

These issues are only some of the areas that spell risk to the buyer. The good news is that all the issues can be resolved given sufficient time and energy. Unfortunately, many owners do not feel they could possibly extract themselves from daily operations and still complete these changes.

Think about this. Every one of the above issues, if fixed, could add 10% to 20% more value to your business. Conceivably, you could double the present- day value of the business by correcting the majority of these issues.

Positioning

Most business owners aren’t aware that there are different buyer-types in the market. Buyer-types include Owner Operators, Competitors, Strategic Buyers and Financial Buyers. Why is this important? Each buyer-type is willing to pay a different price. Given sufficient time, many businesses can be repositioned to attract the buyer-type that will pay the highest price.

For example, if your business today might be positioned to attract an owner-operator – an individual that would step into your shoes and enjoy the same economic benefits you have enjoyed – this buyer might pay $400,000 for the business. On the other hand, with proper counseling, this same business could be repositioned to attract a strategic buyer – a synergistic company that views your product-service set as complimentary to their own. The strategic buyer could conceivably enlarge their market by buying your company and cross-selling each company’s products-services to both customer bases. Strategic buys typically enjoy economies of scale in shared administration, consolidation of facilities and equipment, etc. These economies of scale mean increased profit potential, which translates to a much higher price.

Now is the Time

If you are not going to do it now, then when? Building a valuable company takes time. Most often, it takes two to three years with the resulting increase in value far exceeding the small cost in time and consulting.

Think about it. There is an 80% chance that your company isn’t presently sale-able. How will you retire? If the business is sale-able, it is highly likely the price you’ll be offered is 50% to 100% less than that which you would enjoy by making the necessary changes. We’re talking about several hundred thousand dollars. Isn’t that worth a two-year commitment? Plus, during these two years your business will be changing, getting stronger and generating more profit. It will be a struggle, but one with immediate returns.

It’s a new year. Get excited about your business again. Let a BizMACH Consultant show you how to achieve your dreams and retire in the style you’ve worked so hard to achieve. For less than the cost of a part-time employee, BizMACH will show you how to generate greater revenue, higher profits and position your business to achieve the highest value possible.