Perhaps the most common mistake in business, is staying in business for too long.
Many people who own a small or medium-sized enterprise in Australia today have been doing it for decades. Some businesses have been in the family for generations, but only in certain circumstances is that a good thing.
At some point, you have to ask yourself why you’re doing it. Deep down, the answer is usually ‘for the money’. So why wouldn’t you sell out?
The Exit Strategy
‘Small business owners’ may be in it for the long term, but ’entrepreneurs’ have an exit strategy. That’s because they understand that most of the value they can realistically add to a venture is in the early stage.
They had a good idea. They used their skills and hustle to get it going. Then they expanded rapidly into the market they’d identified for their USP. Beyond that, running a business is a management job.
Sure, if your concept has huge international potential then a degree of entrepreneurialism is still needed: but do you really have the skill set for that job? And are you prepared to risk the value you’ve created so far as you try your hand at taking it further?
Gain Equity and Release Energy
The nub of the argument that you should be ready to sell your business is that when you and your venture are young, you are prepared to take risks and can be dynamic. Once they have built value, most people become far more conservative.
There are circumstances when keeping control of a business can be the right thing to do: for example, you may be an integral part of a community and enjoy that fact; you could be doing something you love; or you might have a very clear plan for one more growth phase before you exit. Ultimately though, in order to get your hands on the full worth of your work so far, you need to sell.
Serial entrepreneur Philip de Lisle says the following in this useful article preparing business for sale from the UK: “Preparing your business for sale is one of the most important things you will ever do – the more effort you put into this, the higher the value your company will achieve.”
With this in mind, you should plan and prepare from an early stage.
Preparing your business for sale
• Get a Valuation: You can get an initial idea of what your business might be worth by checking out online marketplaces for businesses, such as business for sale but you will need a professional to put the final figure on it for you. If it’s not quite what you hoped, what can you do to enhance the value.
• Due Diligence: This is really something the buyer needs to do, to make sure that all the financials and fundamentals of your business check out. But as this article preparing for sale suggests, it’s a good idea to lay it on a plate for them.
• Get Management in Place: Once you sell, you won’t want to hang around doing the hard work for somebody else. A buyer will want to know that your enterprise can work without you, so you need to get a reliable manager in place.
• Don’t ease off: You might have half a foot on the golf course, but this is no time for daydreaming. Your business needs to appear dynamic and growing in order to attract a top valuation and buyer. This is the last push and will give you the biggest pay-off of your life – apply yourself!