The Bad News

If you don’t have a well-thought-out, well-crafted plan to sell your business; if you don’t get the knowledge out of your head and into your team’s toolbox; if you don’t gain clarity of your businesses financial picture, your business won’t sell. If you’re reading this article, then perhaps the next ten minutes will change your mind, and you’ll decide to get your business prepared to sell now. It’s probably keeping you up at night, why your business may not sell!

Your Sales Plan

If you don’t know how much money you need to retire and maintain your current lifestyle after your business sells, then you don’t have a plan. If you don’t know that answer, then you also don’t know how much your business is worth also. Start here; whether that’s with us, with your financial planner or other wealth advisor you need to know where the starting line is to know where the finish line is. Once you have the cash in hand figure and where your probable valuation will land, you’ll understand there’s a gap between your current valuation and the desired sale price. Here’s complimentary information on valuation from our Certified Valuation staff.

Your Head Knowledge

If the Holy Grail of your business resides in your head, then “Houston, we have a problem”. When all the information necessary to operate the day-to-day business is in your head you don’t have much of a business. Your business must be able to run without you. The universe of buyers wants the future potential of your business. If you haven’t created a clear path forward, then sorry, your business won’t sell. A great way to develop your next level of leadership is to challenge them with documenting your processes, automate as many as routinely possible and streamline along the way all while within your oversight. The next withdrawal from your head is to make time to look at your business from a buyer’s perspective with a fresh set of eyes. See your business from a buyer’s perspective and address issues that arise and make necessary changes. Would you buy your business? 

FUBAR Financials

If your financial documents are in a similar situ as your business’ knowledge base and your sales plan, then you’re FUBAR. Fubar is eliminated by making time with JSP and your CPA or better, i.e., Forensic Accountant, Financial Advisor, Fractional CFO. Start with the financial trinity and gain clarity on any inaccuracies in these financial statements as red flags are surefire ways to a ‘no-go’ with potential buyers. Get your financial house in order well before you plan to list your business for sale. At JSP, we will perform due diligence on your behalf to get ahead of any potential issues, weaknesses or blowback. Once we have viable offers (LOI’s), you’ll select the one that suits your situation most favorably. That buyer will enter exclusivity and perform confirmatory due diligence which will uncover any issues your business has, and you chose not to address beforehand. If the first time you learn about problems is when the buyer discovers them, they will have an advantage in negotiating the price, or worse case the deal may fall apart altogether. When it’s ‘pencils down’ you want to hear, “your operation is well prepared.”

Your next decision point is upon you. You can decide and invest time and resources in either improving the value of your business or reducing your lifestyle needs to narrow that gap. What will you do with your now ‘free time’ (Reason #4). We’ve yet to meet any business owners, especially those looking to retire who take time to think about their new-found freedom. Many, without a plan, run out of things to do and realize they were not emotionally prepared to live the life of a retired business owner. When you make time to consider life after your work chapter and gain clarity of what you’re considering, the exercise will give you peace of mind. Chances are you don’t have a documented plan of who’s leading YourCo. after you (Reason #5). Succession development is a bit more in depth than the streaming TV series with much less drama.

There’s a lot to consider, understand and decide on which direction to take and actions to perform. At JSP, we’re here to be an impartial sounding board. We come alongside each of our clients to guide, support, challenge and applaud your efforts and decisions. It starts with a conversation…