September 09, 2019
As a business owner, you have to be forward thinking in terms of both an operational and succession sense. The business owners who are well prepared demand a premium on their selling price, but they also have the ability to evaluate not only the risks of selling but the risks of not selling. We live in a world of rapid change where anything can weaken a negotiation position, for example:
- A market downturn
- The loss of a key employee
- A new competitor
- Changes in regulations
- An economic downturn
- A change in interest rates
- A change in occupancy rates
- An equipment breakdown and/or capital expenditure requirement
- A disruptive technology
- Demographic changes
But external pressures aren’t the only concern. A business owners’ passion and energy level may decline, or poor health may involuntarily force a decision to sell when one is least prepared. This happens all too often. The owner has to take prolonged time off and the business suffers in their absence. Suddenly, the company’s best days are behind it. In a worst-case scenario, this could mean closed doors and employees out of work.
Our CEO, Nunzio Presta, is a big believer in his S.E.T Model and the Three Pillars of creating a sellable and valuable business. The truth is, if you leverage both ways of thinking, you’ll be able to take control when it comes to your succession plan, and you’ll be able to voluntarily exit on your terms as you thinking and playing in the future. As reminder:
1. S.E.T Model: a business owner should always be auditing social trends, economic trends and tech trends, betting on the future.
2. Three Pillars: you need to build a business that is self-sufficient (not dependent on 1 stakeholder), with strong recurring revenue and timing must be right (based on S.E.T)
At the end of the day, the time to sell is when the owner is ready, the business is ready, and the market is ready. But the keyword is READY!
Most business owners wait too long to start thinking about their succession plan and as a result, they end up selling their life-long effort for less than what they could have if they had planned things in advance and were ready! It helps and hurts nothing to start the process sooner than later and keep the eventual sale in mind even if you have no plans on selling now, in the future or ever. And this is why we’ve partnered with Succession Strength and CFIB - to ensure small business owners are succession ready.
From The BizON Blog Team!
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Opinions expressed here by Contributors are their own.