If you are not feeling 100% committed to the business, you’re not doing it any good. Some people are great at starting a business but struggle managing it and others vice versa. I’ve been building businesses for 30 years and I’ve learnt that each entrepreneur has their own story to tell, personal indicators that impact decisions and this is especially true when you go through a sale.
It’s always assumed that being an entrepreneur and owning your own business means you have money. In reality, your cash is all tied up in the business and anything you make goes straight back into building it. The truth is, the first time I actually had wealth was when I sold my first recruitment business, Alexander Mann.
I always remember when I was thinking of selling, everyone said me ‘why James!? It’s one of the biggest recruitment companies in the world – it’s your livelihood!’ and they were right.
Alexander Mann was my baby and I had put everything I had into making it a success. My personal indicator was a feeling of exasperation – I didn’t have any more to give and I knew that if I carried on, the rest of my working life would be predictable.
When I went to get the business valued, I was sure I’d get a great return. I’d built an amazing business that was soaring above the competition. Boy was I wrong! The broker told me there’s no way my business was ready for sale – It had no real structure or long term strategy. The whole business was built around me. I didn’t have a strong management team and I had no infrastructure – my bookkeeper was my mate! I learnt my lesson that day and it took me 5 years to build the business into a viable, saleable business.
When I sold, the business had achieved £130 million in revenue. Upon reflection, I could’ve stayed and the business would probably be hitting £600 million in profits but instead of financial success, I chose the idea of freedom.
Selling a business is a difficult process but there are a few key thing you should be thinking about.
- You need a strong management team. Your business needs to have real infrastructure. You need to show great governance with an effective board, clear strategy, reliable finance and administrative operations and a route to market. I meet many entrepreneurs whose business would fall apart without them because they are the business. When you’re looking to sell, this can’t be the case. If this sounds like you, I’d say you’re running a lifestyle business – a boutique, not a business. Think of it like a game of Jenga – nobody is going to buy something that will fall apart without the strongest block in place.
- A buyer needs to know your brand. Brand identity is essential in the selling process and if you haven’t prioritised it’s development, be prepared to be disappointed with the amount of buyer interest. Your brand is the most openly accessible analysis of the business and potential buyers will want something strong and recognisable enough to carry itself through a business restructure.
- Define your scalability. Ask yourself, is the business scaleable? This is the most important component in the sale. The buyer wants to make money and if your future growth is limited then, of course, this makes the business very difficult to sell. Show your potential buyer just how scaleable the business could be by sharing any future predictions that will excite them.
If you’re contemplating selling your business, think carefully about these aspects. Sell when you are ready to sell and don’t just accept any old offer. Starting a business is one of the most rewarding adventures imaginable, end that adventure on a high and exit with the confidence that you’ve made the right decision.