Business owners have the responsibility and opportunity to determine the future of the company. They are often faced with internal or external pressure to sell their business now.There may be temptations, reservations, anxiety or excitement. Our best advice at that stage is to step back. Don’t let emotions rule the day, because there are effective alternatives to selling your business.
Whether you’re working towards eventual retirement, or you are a younger company working on scaling, your business must build in future value. But to do that, your business needs to be objectively sellable. What does that mean? It means that it has to be able to generate value for future owners—without you and/or your business partners. That is, it needs to be able to generate future profits using repeatable and reliable processes. Buyers buy the future.
Once the pieces are in place, you can reap the ongoing financial benefits or sell your business. The choice is yours. The key is creating a situation where you have alternatives to selling your business. Because the costs of doing nothing are high, and the longer you wait the fewer options you will likely have.
The burning question that every business owner wants to know is whether or not their business can be transferred easily, with little risk and no repercussions for their employees, customers, and vendors. They also want to know if they’ll get back a return that realistically reflects what they’ve put into it.
The truth is that there are many factors that determine a business’ value and transferability. Business owners need an objective measure to get a real idea of the alternatives to selling the business and what the future may hold for them.
At W. Alexander Group, we invest in and focus on transforming your business into a valuable asset. To do that, we examine eight aspects of your company that drive business health, value and alternatives to selling your business, including:
Only by taking an objective look at these crucial facets of your business can we determine its value for sellability.
A business valuation report details the results of an appraisal, which is a formal assessment of the company on the key factors determining the objective value of the business. There is a range of complexity and depth of formal business valuation reports, and many reasons a company might need to have one done.
The valuation serves as a benchmark for comparison to show prospective buyers the value they could acquire. We use business valuation in partnership with you to determine and create alternatives to selling your business.
While it can be easier to proceed with the status quo and not to worry about valuation or sellability, the best time to seek alternatives to selling your business is well before you actually intend to sell. Even if you have no timeline, we advise that you think about the ultimate outcome as if it could happen, so that you are prepared if and when it does.
Thinking about your options now gives you a major element of control over timing, and helps you get the most possible out of the sale or transfer when it ultimately takes place. Here are some specific triggers for considering the alternatives:
If you get an inquiry or offer to sell your business before you’re ready to sell, how will you know whether or not it’s a good offer? If you don’t know what your business is objectively worth to external entities, you may be vulnerable to external forces. Uncertainty also means you may be leaving value on the table. Once you know the current valuation, you have the foundation upon which to build, and effective alternatives to selling your business.
How do you protect the investments you and others have made in your business if you find you must sell before you’re really ready? Don’t rely upon the value YOU place on your business. Sellability relies upon the value others place on it. When you own a business, you stake your current and future security on the income it generates. If the objective valuation is less than the value you expect, it’s time to take stock, consider the alternatives to selling your business, and work towards increasing the objective value before a transition is required.
Similarly, you may be working on aspects of your business and have a solid exit plan. You may know the current value and have great confidence in its growth and future value. This is a great time to think carefully about the alternatives to selling your business, allowing you to maximize the value you get out of it when it’s time to sell or transfer.
Building a business is hard work that requires both financial and emotional investments. Don’t let common owner emotions guide your decisions. It might feel uncomfortable to think about the future, and you might think you’ll deal with it later. But too often, later never comes.
That’s probably why more than 70% of all business owners don’t even have a succession plan for when they’re ready to move on. In fact, many of them simply wait too long to build a sellable business and are forced to exit with disappointment or just close up shop. They never fully reap the benefits of all the hard work they’ve put in.
At the W. Alexander Group, we take a truly novel approach to growing and transitioning businesses. We’re not consultants, bankers, or brokers.
Instead, we’re private investors who work with business owners like you to maximize your business’ value. By helping you grow your business we ensure you earn as much equity as possible while also preserving your legacy.
To achieve this, we work with you to identify your business’ growth levers, such as increased sales, strategic leadership/talent acquisition, or other areas that increase value. We then develop and execute a strategy to build your business’ potential value. That way, when you’re ready to sell, you’ll have a valuable asset and can leave your business worry-free.
If you are a $3mm to $20mm B2B business, schedule an introductory assessment discussion to see how sellable your business is.
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