072 – Your million dollar pay day with Kerry Boulton
Designing a smart exit strategy for your business
I want to start this episode with a simple question – why are you in business? What’s your plan? Is it just to make a good living? To grow and expand? That’s all great but what is your exit strategy? A responsible investor always knows when they will sell but many business owners don’t do the same. Most are just working really hard to make their companies successful. Long-term planning seems like a luxury.
Today’s guest wants you to think bigger. Kerry Boulton is a serial entrepreneur and is the author of a new book titled Million Dollar Pay Day: How To Get Rich and Get Out. In it she describes the end game strategies of the rich and famous. Key among those strategies is the development of an exit strategy early in the life cycle of your business. There are some hugely important aspects that potential buyers want to see in any business. Those need to be in place well before you are ready to sell.
The first thing that a buyer wants to know is whether your business can function without you. Have you put in place the processes and infrastructure that someone else could run? This isn’t as easy as it sounds. You’re deeply invested in your business and not just monetarily. People are emotionally attached to their companies and that can often result in an inability to let go. If everything resides in your head it’s no good to anyone else. A great way to transfer your knowledge is by recording your daily routine. Turn on the recorder in your iPhone and document everything you do throughout the day. Transfer that to a written document and now you have a handbook for how your business operates.
Know your business
There are so many aspects of your business that need to be maximized before any sale. Cash flow, recurring revenue and sales numbers are really important. Some things that will put off potential buyers is an over-reliance on one or two key employees. If those people leave the company how badly with the bottom line be affected? Depending on just on or two suppliers is also a big turn-off. If there is a supply chain disruption do you have redundancies in place? If these elements aren’t finally tuned the sale price of your business will take a serious hit.
Paperwork, paperwork, paperwork
Can you provide the last three years of your business tax returns? What about your other financials? If you don’t have a clear record of your business revenue and profit then your company is worth next to nothing. Having your paperwork in order goes beyond financial statements. A client database that is up to date and accurate is just as important. The really important systems that allow you business yo function need to be clearly documented. Training, hiring and employee handbooks make your business look professional and ready to be sold.
Know when to sell
Being able to clearly articulate what makes your business different from your competitors is the only way your will be able to entice a buyer. But before that happens you need to know where you’re at in your life. Are you ready to sell? Whether you want to or not is immaterial. The business should always be in a place that it can be sold. You never know when you will need to liquidate your assets.Share this: