The saying goes: “A dream without a plan is just a wish.”
It’s true in many aspects and especially so when it comes to selling your business. Many owners will assume or decide that they want to eventually sell…and that’s as far as their thought process goes. No reason for selling, no input from anyone, no vision for life after the exit. It’s just going to go according to plan—except there isn’t one.
When the idea of selling your business enters your brain, it begins as a wish by default. It’s not a right, and certainly not a given. Your business has to be salable, and even then, everything needs to fall into place in regards to the business readiness, market readiness and your personal readiness. Every business can sell for a dollar, so selling it is not hard. Getting a return on your years of fortitude and service is the real question.
When you tell me that you want to sell your business, I have so many questions—starting with, “Why?” Are you trying to cash out and get some skin off the table? Are you bored and would like to do something different? Did you find a new opportunity a that is gaining traction? Or do you want to stop the rat race and retire? What do you want out of this? The reason sets the foundation for us to continue the conversation.
Once we know why you want to sell, we can begin to envision not just a sale, but a successful sale. I’m talking about the sale that gets you from point A—where you are right now—to point B—where you see yourself after the sale. It doesn’t matter if it’s a beach chair, motorbike, cubicle or boardroom; the possibility is real, and it’s your dream.
Going from wishing to dreaming is a fantastic step on the road to selling your business. It means you’ve put thought into your idea. But keep in mind that a dream can still be dashed by reality. For example, if you’re taking home $500k per year in salary and want to maintain that lifestyle after the sale then you will need $10M invested (getting 5% annual returns) to make that same money. In California, that could require as much as a $20 million sale price. In reality, if you’re making $500k from your business today, your company is not worth $20 million. You’re dreaming.
The mathematics of selling a business is where dreams turn into plans. And when you have a plan, you have something to work toward and measure against. Instead of picking a sale price because it sounds nice, we can calculate how much your business is really worth. If it’s not worth what it needs to be in order for you to achieve your dream, we can identify how to get you there. Once you have a plan, your wish becomes the dream we can make come true.
At Exit Consulting Group, we provide an in-depth exit assessment spanning eight categories that combine to provide a Business Readiness Score. Wishes and dreams are nice, but the only way you’re going to do this is with a plan. Contact us to get started.