According to Price Waterhouse Coopers, over the next ten years approximately 50% of all owners of small and mid-sized companies will exit their companies. Retiring baby boomers are driving this massive exodus from the marketplace. Unfortunately, among the group of small business owners who exit their business, only about 1 in 5 owners are successful in selling their company. The remaining 80% of these business owners are closing their doors with a big fat zero for all their hard work!
Why is this happening? Reality is that not every business is saleable. Additionally, there are a limited amount of business buyers who have lots of businesses to choose from, and they are shopping for the best return on their investment. In the business acquisitions world, over the next few years it will likely become a buyer’s market.
Business owners are reluctant to create an exit plan; it seems like planning for your own funeral. They are afraid of what life will be like without their business, so they do nothing. However, the truth of the matter is that there is opportunity in selling. This is an opportunity to cash out now, and enjoy the fruits of their labor. This is an opportunity to try something else; another business, ministry, travel, time with family.
Below are some things you can do to increase your chances of selling for big bucks;
10. Create an Exit Plan. You know the drill; “those who fail to plan, plan to fail.” The problem with failing to plan is obvious. Hire an Exit Planning Coach.
9. Plan Three to Ten Years in Advance. Most experts say that you should have an exit plan when you start a business. Three to ten years is the minimum time to prepare.
8. Sell From a Position of Strength. You can command top dollar when your business is strong, growing and you love it! Unfortunately, many owners wait until an economic turndown, a health crisis, or burnout forces them to sell from a position of weakness.
7. Know the Value of Your Business. Every business owner should get an annual valuation on their business; this is the best indicator of a company’s performance.
6. Get Revenues and Profits up. Your business should be growing; both top line and bottom line. Become the number one or two largest business in your market.
5. Develop Management Succession. If you're the only one who can run your business, who will a buyer have to help run the business after you leave?
4. Maintain Confidentiality. This is critical to the health of your organization. If your competitors, customers, employees or vendors find out that you are selling, this could mean disaster for your company!
3. Keep Focused on the Business. Don't let your business performance decline because you're too focused on the sale of your business. Work on your business as if you don't plan to sell it.
2. Get Help From Professionals. You will need an Exit Planner, a Financial Planner, a Professional Employer Organization, a CPA and a Tax Attorney on your team.
1. Get Your Books and Records in Order. Hire a CPA to prepare your statements; this will give the buyer confidence in your financials. Also get your legal documents in order.
Even though only 20% of all small businesses are selling, it is possible to get yourself into that group. But it is going to take some planning and some more hard work to get yourself into that group. You should start today!
Top Ten List Survive the Big Boomer Business Bust - To learn more about this author, visit Alan Melton's Website.
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Alan Melton
(Visit Alan's Website)
Alan Melton founded Empire Business
Brokers, LLC in Greer, SC in 2004. www.empirec
arolina.com . The company is focused
on business acquisitions of companies up
to ten million dollars. Part of an
international company with 70 locations,
Empire has been providing business
brokering services since 1981.
Alan has been buying and selling
businesses for the last fifteen years. He
has coached, advised, and taught hundreds
of small business owners over the last ten
years. Alan is a nationally known writer,
speaker and business leader. Over the last
24 years, Alan has started and led eight
companies.
Alan Melton co-founded and served as CEO
of East Coast Transportation from 1983 to
2001. The company was listed locally and
nationally over a decade as one of the
fastest growing privately held companies.
Prior to selling E.C.T. to a publicly held
company, Alan was recognized by the US
President as the SBA’s Small Business
Person of the Year, and by the Florida
Governor as the recipient of the Sterling
Award for organizational performance
excellence; joining a distinguished list
of recipients such as Merrill Lynch, the
Ritz-Carlton Hotel, and Honeywell.
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