The Common Denominator of Successful Transitions
Do owners who successfully transition their businesses share features that enable them to achieve their goals? Although each situation is unique and there are multiple variables at play, the ones I am familiar with often exhibit these common strengths:
- They had a goal. Not a good intention or a wish, but an actual goal with a plan, a date and a strategy.
- They had help. They didn’t do it on their own. They reached out to trustworthy experts to give them good advice. They found coaches, who like pilots, could help them to navigate the unknown waters, develop their plans, make adjustments along the way and follow through to their destination.
- They prepared well in advance. It wasn’t spur of the moment or a rush.
- They got the timing right. Being prepared put them in the right place at the right time when the buyer showed up.
- They did their due diligence. They looked at their business through the eyes of a buyer and corrected the critical pieces that could hold up the sale or cost them dearly.
- They had a good story to tell to help sell the future value of the business. They had growth, profitability, a definable market, cash flow, predictable revenue, and a product or service that was in high demand.
- They had a diverse customer base that did not rely on one or two customers for a large percentage of their revenue.
- They had their books in order. Taxes and payables were up-to-date. Receivables were under control. They knew their numbers.
- They made themselves redundant. The business was no longer dependent upon the owner to be there all the time. The owner had successfully delegated responsibility and trained competent employees to do whatever was necessary to keep the business operating well.
- They had prepared themselves mentally and physically for the change. They were ready to move on.
Finally, they were lucky. The statistics aren’t in your favour. Less than 20% of businesses will ever successfully sell. There are no guarantees, but the chances go up significantly if you cover the bases above. If you’re counting on JUST being lucky and not completing all the other steps necessary for success, you might do just as well buying a lottery ticket… but I wouldn’t bet my retirement and the livelihoods of my employees on it.
April 3, 2017
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