Monday, 8 October 2012
Are you holding your company back? If so then perhaps it's time to learn how to let go. . . profitably.
Three-quarters of business owners expect that the sale of their business will provide them with a big lump sum for their retirement. However, only a quarter of business owners create any kind of plan for their exit, resulting in most coming away with a couple of laptops and a few staplers to represent all their hard work. What's more, your business is not worth what you think it is. This combination of factors is a recipe for disaster.
THE ROUTE TO GREATNESS
Really great businesses are obsessed with three things:
- Where are we going? (Strategy)
- How are we going to sell this stuff? (Marketing)
- Why don't we get on better? (Team-building)
And... really great growing businesses are obsessed with two additional items:
- External finance - growing a business needs lots of cash to invest in the future and pay for things now
- External advice - you simply can't do it all on your own and need help from outside advisers, as well as from your team
In essence, the thing holding back most growing businesses is fear - of letting go of financial and management control.
YOU ARE THE PROBLEM
In a survey, we asked growing business owners what held them back. We also asked successful, sold-up, ex-business owners what they thought had held them back in their growing stages.
The business growers named external factors - customers, competitors, banks, red tape, poor advisers. In fact, they blamed everyone but themselves.
The ex-business owners said that when they were growing their businesses, the one thing holding them back was themselves, yet they blamed the outside world. They were frightened of letting go. Put another way, they were the bottleneck, spending too much time 'in' the business and not enough time 'on' it.
So, you are the problem!
But it doesn't stop there. There's one additional item that needs to be taken into account. Most businesses believe their biggest weakness is marketing - getting hold of more, and better, clients of the right quality and character. So not only are you the problem, but you also need to work on your marketing.
A BUSINESS FIT FOR SALE
To create a profitable exit, you need to create an attractive business.
Such a business needs to demonstrate:
- Underlying repeatable, sustainable profits (now and in the future)
- References and trophy clients
- Distinctive capabilities (patents, licences or defendable intellectual property) and
- A senior team to take it to the next stage.
Exit planning is like writing a will - it can always be put off until next year. However, I have seen too many sad tales of friends, family and business colleagues not receiving their just rewards because they hadn't 'got their act together'. So there's no time like the present.
THE DOS AND DOS OF EXIT PLANNING
1. Realise that now is the time to plan the exit
2. Create plans that focus on creating an attractive business
3. Create systems and processes that can be duplicated and scaled up - a tested model that shows how every pound of investment can generate £X of output
4. Create a marketing machine that delivers a steady stream of profitable, desirable clients
5. Write yourself out of the business model
6. TAKE ACTION, NOW