Most small businesses aren’t worth as much as their owners might think, especially if the owner is no longer part of the business. One of the biggest reasons for this is because most companies were started by an owner who is an expert in whatever Product or Service the company offers and chances are the owner is still intimately involved in providing those Products or Services. After all, that’s typically why the owner got into the business in the first place; he loves his Product or Service. There is also a good chance that the business owner didn’t start the company with a clear plan for how she was going to eventually exit the business. Those thoughts of potentially “getting out” tend to come up years later when the business owner is feeling worn out or worn down by the business.
As you might imagine, this is typically not the best time to sell the business for enough money to allow the owner to retire. Chances are if the owner were to sell the business at that point, they would either get very little value for the business or they would have to remain with the business for several months or years so all the jobs they are performing could be transferred to someone else. The ideal time to sell the business is when the owner isn’t required to be there day-to-day for things to operate.
One of our first business-coaching clients came to us in this situation. The two partners had built a business around their expertise of a service and after 12 years together, they had fallen out of love with each other and the business. They wanted to figure out what the company was worth so they could sell it. When they found out that their company wasn’t worth as much as they had hoped, combined with the fact that they’d need to stick around for a couple of years to transition their knowledge to a new owner; they decided to transition their knowledge and expertise to their team before attempting to sell the business. Over the next few years, they incorporated their knowledge into the business and the team and began to remove themselves from different day-to-day aspects. This freed up the owners to the point where they were able to buy a competitor and then one of the partners bought the other partner out before eventually selling the business to a larger competitor and walking away a few weeks after the sale was completed.
We have helped several other small business owners over the years get their business ready to be sold. What’s funny is that many times, once we are able to extract the owner from day-to-day operations, the desire to sell dissipates since they begin to have fun running the business again in a whole new way. Utilizing our 7 Keys to Success as a guide, Maximum Value Partners helps the business owners become more confident in running the business side of the business and not just the Products and Services.