Are you leaving money on the table?
Over the combined 50+ years the team at JBV has performed valuations, we hear from proud business owners, “This business would be nothing without me.”
It’s inevitable one day, they will not walk in the door. When asked what happens when that day comes, they shrug it off. They realize the business may sell for much less than its true worth.
Too frequently, they are right. The business is worth nothing without them. He or she makes all decisions and is effectively if not in practice CEO, CFO, VP of Sales & Marketing and VP of Operations. And size of business seems unimportant. We’ve seen this in companies from $5 million to $25 million in size.
Is this smart? Is this fair to your family (especially those working in the business)? Your employees?
The obvious answer is no.
Can it be fixed?
The simple answer is yes.
The recipe is simple. The ingredients: a bit of work, time, and the willingness to cede decision making to others. This last ingredient is the hardest for many entrepreneurs. (read more on why you must delegate here)
McDonalds and other successful franchises provide turnkey businesses to franchisees. By turning yours into a turnkey business, your business can be sold for its true worth. It’s been proven over and over, buyers won’t buy a business which lacks a strong management team, one that is not dependent on you!
What do buyers look for?
- Well developed team
- Organizational chart
- Employee retention
- Customer retention
- History of earnings
- Annuity-like cash flows
Ask yourself honestly, “Would I buy my business?” “Would I want my child to live the life I lived in this business?”
In a series of articles, we will discuss ideas on how to turn your business into a more profitable turnkey business. One that can prosper without you.