You probably got excited that I will take a zero percent business brokerage fee…and I will under certain circumstances like the one below.
We sent a small batch of emails, and several came back, such as the one below.
We also had business owners who died on the job, etc. It’s heartbreaking that twenty years of work nets a $0 sale price. That’s why I will work for nothing because you might get nothing.
Why does a business owner shut down? The business has a brand, customers, and some value…or does it? I’m guessing that the owner of this award company felt like the hassle of selling the business was not with the pittance they would receive. Again, this is heartbreaking.
We have done plenty of autopsies on situations like this, and there’s one thing in common – the owner has a job called a business name, not a business. No one wants to buy your job.
If you want to maximize the value of your business, there are some proven strategies to avoid these heartbreaking situations:
- Make sure the business is not entirely dependent upon you. If you can’t take vacations, that’s a sign. Heed it and fix it.
- Make enough money that buying your job could be attractive. This may sound funny, but think about franchising. Plenty of people plop down good money for a franchise that is standing behind a counter making sandwiches or scooping ice cream. In fact, a general rule in franchising is that the franchise fee should equal one year’s earning potential.
- Be unique. Great brands and business models get premiums when it’s time to sell.
- Have great workflows and systems and document them. Not only will this help remove you from the daily operations, but it will demonstrate to a buyer that you “have your act together” and will ease typical buyer uncertainty.
- Lock down key team members. The buyer of your business will be very dependent upon them, so make sure they are paid well, and they are staying at their job for reasons beyond personal loyalty to you. It seems like ninety percent of business owners cite personal loyalty as a reason key employees stay. That’s great for today, but what happens when you are gone? Make sure work is satisfying. Consider locking them up with good pay, equity, or both. Know what motivates key team members other than loyalty; it’s going to come in handy when you exit.
