Posts tagged with: maximum value

Do You Want To Make The Most Money Possible When You Sell Your Business?

“Do You Want To Make The Most Money Possible
When You Sell Your Business?”

Do You?

If you’re like most business owners, your answer to the question above is a resounding “YES!”  If so, then pay close attention to this message so you don’t make

The 5 Deadly Mistakes That MOST Business Owners Make When Planning Their Exit Strategy!

These easily avoidable oversights can (and WILL) wipe out as much as half of your potential net worth! But, early adjustments will help you maximize your profit when you exit your business.

That’s why I developed my 4 Step Exit Strategy Framework System™ which I’ve now turned into this home-study program Selling Your Business for Maximum Profits.

Tomorrow, Tuesday, May 27, is the product launch for Selling Your Business for Maximum Profits. Watch for an early morning email with the website link AND your promocode to take $1,000 off the regular price.

These easily avoidable oversights can (and WILL) wipe out as much as half of your potential net worth! But, early adjustments will help you maximize your profit when you exit your business.

It’s never too early or too late to plan your exit

PS This discount promocode will expire on May 31. You must act now to secure your copy of Selling Your Business for Maximum Profits at this special price.

 

Transfer YOUR Knowledge

When you get ready to sell your business, the value of the business must be in the business to be monetized and for a buyer to see the value without your active involvement.

Before you can sell the business for maximum value, you must transfer all your knowledge and wisdom into your team, systems, procedures to carry on prosperously in your absence.

For each challenge listed below, here’s what you need to do:

IF/THEN

The whole business is in your head – only in your head

You must share every idea, policy, system, process, key, password, contract, etc with your management team. You may give specific tasks and responsibilities to specific people or you can appoint a successor to take on your operational role

Don’t know how to plan, when to plan, when to find time to plan.

You must delegate day to day operations and make time to plan strategically. Get training, hire an advisor, or hire a temporary COO to get plans in place

No marketing plan, sales plan, financial plan or operating plans – except in your head

Get all these plans out of your head an on paper and assigned to different people to implement and achieve the goals in each area. Delegate responsibility for each area of your business to someone, not you. Make them operationally responsible, not you.

Don’t know how to automate or outsource

Exit planning is a great incentive to learn to automate and outsource to get more done, cheaper, not by you. Start by automating just one task. Start outsourcing by hiring an individual or a company to take over just one task or project on your To-Do list.
Decide no new tasks will get added to you To-Do list – instead you will always seek to delegate, automate or outsource first.

No operating procedures

Create an Operations Manual. Buyers expect to be able to read your operations manual, instead of calling you for each procedure. Every time you do something that is a process or procedure, write it down. Every time you document or record how you do something, you are adding value to the business. Start by simply taking notes on an index card for each task, process, system, tool you use.

No contingency plans

A contingency plan is like a security blanket for your business. It protects you, your business, your team and your customers. It also demonstrates to your buyer how valuable your business is that you are willing to protect everything that can be considered unique systems, models or intellectual property. You must lay out your emergency plans for fire, flood, other natural disasters, loss of power, computer crash, password security, data security and redundancy, safety and OSHA policies,  backup procedures for when each person is on vacation or ill, etc.

No exit strategy in place

You must choose to take action to explore and consider exit options that would suit you. Take responsibility for ensuring the longevity of your company, the legacy you can leave, and providing ongoing employment security for your team. By following an exit plan you will be in control of when you exit, on what terms and the valuation you will receive to fund your reinvention

Keep all expertise in the owners/ executives heads and private files

You must start sharing your knowledge and wisdom in the business and about the business. You will maximize the value you will receive at exit, only if you transfer all of your knowledge and wisdom about the business to your team.

Everything on this list is a challenge all owners face to some degree. You can share your knowledge, understanding, wisdom and guidance willingly with your team and make your business an attractive buy at a premium price. Or you can horde all your knowledge, resist potential buyers’ due diligence efforts to understand the value in your business, and struggle to sell the business for a fair return.

The good news is that we can all learn new mindset/attitudes and beliefs, we can all learn new skill sets, and we can all learn new information combined with experience to produce the knowledge we need.

How to Set Goals That Ensure a Successful Exit Strategy

There’s a lot on your plate when you start a business. Of course, you need to be clear on your mission and vision, your business model, your market research, marketing and sales strategy and your operations to implement your business plan. You can be consumed by the day to day responsibilities and urgent demand. All of this eats up time.

There’s another critical piece that’s easy to put off but very critical to achieving your long term goals and that is your exit strategy.

If you set your exit strategy as part of your initial goal setting then all your goal achievements will lead towards your ideal exit strategy.

Here are 5 recommendations to ensure you set goals that get you to a successful exit:

1. Choose the right exit strategy for your goals
You have monthly and annual goals for your business. You want to commit to these intermediate goals only if they are aligned with your long term goals and the ultimate goal achievement of your ideal exit strategy.

2. Set business growth goals aligned with your exit strategy
Your growth goals are essential to the healthy, strength and survival of your business. When you look at your growth goals in the context of the exit strategy you want to implement, be sure your growth goals are taking you in the same direction. Growth that is in conflict with your exit plan or competes with your long term goals will hurt the business and limit your ability to achieve your exit strategy.

3. Identify goals to increase value
The value of the business is not just in terms of assets or cash flow. It’s also in your intellectual property. Your intellectual property could be in your team, your processes, the relationships you cultivate and maintain with clients and vendors, etc. So your goals to increase value before your exit could be in these less quantifiable areas that translate into a much higher valuation for the firm.

4. Plan your exit strategy by intention rather than by default
This sounds like a lot of work. In fact, it is. But, if you don’t do the work to plan your exit – then your dream of achieving an ideal lifestyle, living your legacy and leaving a dynasty – then you are abdicating both the responsibility and the reward. If you don’t plan your exit by design, then you will settle for what you get by default.

5. Systematize your exit strategy to maximize value
The more you can systematize your business so someone else can run it equally well without out you, the more a buyer will be willing to pay you to keep it going. The better you are at systematizing everything, the easier it is for a broker to pitch and leverage that value for a higher price. This step takes discipline and consistency starting long before you intend to exit.

Apply these five recommendations to get the results you want. That’s how you achieve every goal you set. That’s how you ensure your own successful exit strategy

Is Maximum Value One Of Your Goals?
  • What does that mean to you?
  • Goal achievement is only possible if you have a goal you want to get to.
    Do you have a number you want the business to be worth?
  • How long will it take to achieve your goal, achieve that number?
  • How important is that number to your personal long term plans?
  • Do you have a number that you need in the bank in order to secure your retirement?
  • Do you want to live your legacy and leave a dynasty or do you want to work yourself into an early grave?
  • Do you want to pass on the business to family or successors and create an exit package?

These are easy questions to ask. They are hard to answer. If you find yourself not doing this homework or you keep justifying why you don’t need to do this now, or you think it doesn’t apply to your business, then you are unconsciously jeopardizing your business and your future.

Selling For A Maximum Value

You want to sell your business for maximum value. Here are three solid guidelines to make that goal a reality.

Focus valuation discussions on the future potential of a business – not past performance

  • When you negotiate valuation with a potential buyer, it is essential to focus the discussions on the future cash flow potential of the business. A buyer will be more confident and engaged in investigating the purchase of your business when they can perform a business analysis and thoroughly understand the company’s financial performance.
  • To be effective in valuation negotiations, sellers will want to conduct rigorous industry research and analysis; develop defensible financial projections; and position both pro-forma financial and strategic benefits (including revenue and cost synergies) of the sale/acquisition/transition to a new owner.

Don’t leave money on the table by neglecting the intangible value of a business

  • At a minimum, expect a buyer to pay at least the basic value of your business.
  • Too often, sellers don’t recognize that they have the opportunity to monetized the intangible value of the business. When they try to go it alone, inexperienced sellers do not properly substantiate, support and quantify the intangible value of their business to maximize the sale price.
  • Applying proper valuation methodologies and techniques for your industry can help you maximize the value of your business that you can command. It is also important to use historical financial statements to sell the advantages of this purchase opportunity for the buyer.

Negotiate a winning deal structure

  • The structure of the transaction is just as important as negotiating the valuation.
  • To secure and preserve the maximum value of your company, it is critical to build a strong exit team that can effectively structure a winning deal and negotiate the terms and conditions of the transaction itself.

These three guidelines will translate to maximizing the value a buyer will pay for your business.

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