What’s Sellability?
As you may know by now, at BizON we aim to provide our members with a resourceful experience and marketplace.Our main goal is to connect and educate business buyers and sellers. Below is a guest entry from one of our partners, Phil Richardson. Phil does an excellent job discussing the importance of planning for succession or the sale of your business and also discusses the concept of “Sellability”.
Planning for Succession or Sale of you Business? Why you Should Start Now!
Why fire trucks always back in!
Have you ever noticed that fire trucks always back into the fire hall?
Why don’t they just pull into their parking spot snout-forward like the rest of us?
Backing in at the end of a shift saves them time when they have to get to a fire. They back in to be ready; whether the call comes in 5 minutes or 5 days, they are prepared to pull out as quickly as possible.
Like the firemen, you, as a business owner, need to be ready when you get the call from someone who wants to buy your business. And these days, owners are getting that call more often. According to the latest Sellability Tracker report, the proportion of business owners who received an offer to buy their company in the quarter ending March 31, 2014 was up considerably from Q4 2013. Roughly 12% of business owners using The Sellability Score last quarter had recently received an offer to buy their business.
The proportion of owners getting an offer is an important statistic because it measures one half of the equation of a business sale. For a transaction to take place, there must be both a willing seller and a willing buyer.
Companies are becoming more acquisitive because they have access to more cash than they know what to do with. Interest rates are next to nothing, and after the liquidity crisis of 2008, companies have been socking away profits on their balance sheet for a rainy day.
This increase in acquisitiveness among buyers has important implications for you as a business owner. Chief among them is that you need to have a sellable asset when opportunity strikes.
Statistically speaking, the two most common reasons you are likely to sell your business are:
As unsolicited offers increase, so too does the need for you to be ready if an opportunity comes your way. Unlike when the owner is in control of when he/she decides to list a property, the hallmark of an unsolicited offer is the fact that the owner doesn’t’ know when it is going happen; which means you need to operate your business as if an offer were always around the corner.
- A health scare;
- An unsolicited offer to buy your business.
Companies that are sloppily put together with shoddy bookkeeping or too much customer concentration, or that are run by a Hub & Spoke manager, will end up being passed over for turnkey operations.
The time is now for you to get your company ready to showcase when opportunity comes knocking.
Phil Richardson is the President and Founder of Bizgrowth Coaching Inc. Please feel free to email him if you’d like some more information or have any questions at info@bizgrowthcoaching.ca
From The Desk of BizON
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