Stop—What If…You Do Something Different?
There is that wonderful classic tale of a couple of U.S. tourists who, whilst driving their hire car are lost in the back roads of Ireland, so they stop to ask a local farmer for directions. He tells them: “If you want to go to there, I wouldn’t start from here.” Likewise the same might apply to your business. It might not be the business you wanted. You might have inherited the family business but rather than work it, you would prefer to be a rocket scientist. It might be your business has become a lifestyle business and that you’ve had enough. Or that you set up a landscape gardening business to use some of your creativity and now all you seem to do is repetitive lawn-mowing contracts. Or you set up to create exotic ice creams or cakes and today over 90 percent of sales are still vanilla and chocolate.
Sell Out
We could hypostasize forever, but if you are a square peg in a round hole, you might prefer to stop rather than grow. But stop is rather extreme. If you’ve read this far, it is a fair bet that you have created something with a value and that with a little more effort you could realize that value for yourself as opposed to throwing the whole thing in the trash can. So instead, what if…you sell your business. In doing so:
We should stress that a little effort and patience from you can materially alter what you can achieve from the sale of your business.
Let’s consider a few pointers to increase the selling price:
• The best sales price is usually achieved for a going concern, that is, trading and healthy with no major problems existing or on the horizon, and ideally with growing profits. So if you can encourage revenues, if you can resist unnecessary costs, then you’ll improve the profits which add sales value. Normally one can expect to achieve an increase in sales price by a multiple of any profit improvement.
• The business will sell for more if you can personally be taken out of it without materially damaging its business levels. In that event, your drawings, wages, and other costs associated directly with you can add to the bottom line for the buyer. So try to ensure you are dispensable, not the operational focus.
• A buyer in a similar business might pay handsomely if he can bolt on your sales to his business, but dump all the costs. That might leave you with some clearing up tasks, but think of the money.
• A buyer will pay more for a business that looks clean and tidy. So maybe dump the junk in the warehouse or backroom. Maybe mend the faulty whatever. A new coat of paint? Replace chipped crockery. Dump the problem customer, put flowers in reception… It’s your business and it’s your list of tasks needed—you do know what we are talking about.
• Be positive around potential buyers and don’t panic. It is unlikely they’ll make you an offer immediately, but a favorable first impression is vital, so that they want to come back and negotiate.
• Statistics indicate there is a strong possibility you will already know the identity of your buyer. Therefore, take a little me time and generate a list. Ensure you think outside the box and spread the word.
• Have you thought far enough outside the box to consider selling to your staff? If they can’t afford to buy, why not rent it to them and have an income whilst pursuing something else with your life. And still be able to sell later.
Failing all else, and you can’t sell the business, are the assets that make it up of value as individual items? A family member of one of the authors was the youngest member of a funeral business and, at 75 years, a little old. There was no business to sell on as everyone else had retired. But in the business was a 1929 Rolls Royce car, which when sold provided a nice pension.
Seeking to sell warts and all is a sure-fire way to get the fewest dollars from your sale.
If you are planning to sell up, do spend a little preparation time on the question you are bound to be asked by your buyer: “Well then, what are you going to do next?” No purchaser will want to know you are selling up only to start the same business again in competition.
If these suggestions are not enough, the Grow section includes making an acquisition. If you think of an acquisition as the opposite of a sale— which it is—you will find the acquisition pieces also useful in shaping your sale plans. That’s because if you examine your business through the lens of an acquirer, you should be able to see—and deal with—any likely area of complexity which could drive down the price, without waiting for a buyer to do that in front of you.
Recycling Is Not Quitting
If you still want out, but really, really can’t see how to extract even one cent from a potential acquirer for what you have in place already, there is another alternative other than closure.
Recycle. Stop your business doing what it is doing, right now. Tomorrow morning investigate each asset you have—people, equipment, premises, processes, customers, brand, deep relationships with others in the value chain, and so on—and allocate it a role in whatever you want to do next. Sure, there will be redundant parts but the pieces you are capable of reusing are surely less expensive than buying new (if equipment) or hiring and training (if people). You are also avoiding all the administrative hassle of incorporating the new business, registering it with authorities and utilities and all that nonsense involved with setting up new banking arrangements. It is also much less disruptive if you are retaining some or all of your previous customers.
We bet that Jackdaw’s Chicken Shack reopening as Jackdaw’s Thai Kitchen would retain a tidal wave of customer goodwill that would not be available if the name became Thai Palace, for instance. And that loyalty is going to save you many thousands in advertising.
Still Don’t Know?
Within this Stop section, we’ve considered the people, the product, the customers, and the money. You must have found some affinity with some of those issues and the odd nugget in the portfolio of suggestions. You will have read that you can Stop doing what you are doing, at least long enough to catch breath. Whilst enjoying lungfuls of fresh air, you looked externally as the world has changed immeasurably since you last checked and then will have examined your team, your tools, and yourself. Have all these factors changed in your company too, anywhere nearly enough, to keep your business ahead of the world? You’ve already reviewed pages of initiatives to consider and implement. We see these opportunities as a chance to free up headspace and create more time, energy, and resources for the next stages.
But you want more. Change is what is required now. Several changes are overdue. Some are big ones requiring steely resolve as you won’t be able to undo them later. Some might appear small but will give you scale advantage later. Changes we identify should be neutral in operation in terms of energy and resources required so that if in this part you find something that’ll work for you, don’t wait to finish the book, just get on with it.
Later to Grow will take investment in energy, money, and focus rather more than anything else to set the platform for growth. If you’ve got the right people, the right tools, good suppliers, and customers, you’ve got the mandate to shoot for the moon. Let’s show you how—but first, Change…
Pause: Did you make notes of things in the Action This Today section in the back of this book? If not, please take this opportunity to review the prior pages to identify again any thoughts and ideas you want to follow up on.