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Negotiating Business Sale: What's Your Exit?

Posted On - 11/11/2016 08:04:24

If you don't have a plan or strategy to exit YOU from your business that'll concern buyers. And that's a problemEven if exit's not your plan it still makes sense to make your business sale-ready. You'll get a decent price when you sell plus you'll get a better business now.

So far we've covered how customers, income type, profitability and growth potential all combine to push price up. This week we turn to something much closer to home - YOU. Because if you don't have a plan to exit YOU from your business - often referred to as an "exit strategy" - that'll concern buyers. And that's a problem.

The Entrepreneurial-Myth

Written in 1986 the E-Myth made Michael Gerber. Suggested by some as "the World's #1 Small Business Guru", what he had to say then is every bit as true now: entrepreneurs are typically poor at business. He wasn't making an insult - this was recognising facts.

Entrepreneurs are full of ideas and ambition. They're outstanding at what they do and driven to do it. They'e courageous enough to go-it-alone and be their own boss. But, as good - as great - as all that is they're much less good at running a business. All that commercial and operational stuff, all that health and safety, human resources and administration? Are you kidding? They didn't go into business to do that.

Tell-tail

We've witnessed Gerber's point many times. Time and again over the years we've seen hundreds of small businesses who find business difficult. And they find generating new business especially hard. Curious when you think it's the very thing they've got to be good at. And incredible when you think they should have realised that before they started.

But, be all that as it may, it makes sense. Like we said they're entrepreneurs. They didn't go into business to do sales and marketing or be a managing director. They were driven by an idea. And that's the root of the problem.

Built in dependence

You're in computers because you love them. You're in computers because you know everything there is to know about them. You're great at building and fixing them. You get a real kick out of helping and advising people what's best to buy. There isn't anything you don't know or can't do.

So it's your competence – your knowledge, your skills, amassed over the years - that's on sale. That's what customers get when they come to a specialist niche expert business like yours. Proper personal service from someone who cares and knows what they're talking about. YOU. Question is: does this make you business worth buying?

Utterly priceless

You can't delegate why customers chose you. You can't farm out YOU. And whether you're quite literally a sole trader or have staff it's commendable you've created something special people want. It's customer focussed. It's the essence of what independent small businesses do and the choice they add to the market. It's admirable in an age of faceless big name chains and the impersonal internet.

But there's a problem - a big problem. Because as good as all this is what it isn't, can't and never will be, is saleable.

Working ‘in' your business?

What is ‘work' to you – what does it mean? Do you turn up every day and pick up where you left off – the gaming build you were on, the screen replacement not finished or the malware removal you'd started but not had time to check? Or do you sometimes take time out to think about what you're doing with your business and why?

What makes us ask? Why does this matter? Well, the thing Gerber's probably most famous for is the distinction between working ‘in' and ‘on' your business. His point is too many business owners spend all their time working ‘in' their business. They make the money. They look after customers. They pay the bills, place the orders... That's the job - that's what they do. Their business is them. They are the business. And without them, there is no business.

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