It may interest you to know that the process of selling a business is usually not top of mind for many business owners. Some time ago Steven Covey, in his landmark book, The 7 Habits Of Highly Effective People wrote, for habit 2, that you should “begin with the end in mind.”
While this, and the other habits Mr. Covey wrote about can apply to many situations, I’d like to frame it in the context of owning (and eventually selling) a business. I often hear owners asked “what’s your exit strategy?” as if not having one will be detrimental. Usually the response is underwhelming: “I’m sitting in it,” as if to say either “I don’t want to think about it” or “mind your own business,” or both.
Having a concept or a plan for the eventual sale event does make sense, as it helps owners to develop strategies, goals, and objectives that can guide their business actions (and transactions) over the course of the business cycle and growth.
Again, however, it’s not top-of-mind to most owners when they start their business, and can become increasingly elusive the more an owner is involved in growing the business.
And what happens when those owners are part of the largest segment of business ownership – and who all may need to sell their business in the next 10-15 years?
Boomers Built An Economy!
Baby boomer owners built their businesses successfully, and now represent approximately $10 trillion worth of assets that are held in more than 12 million privately owned businesses. Because our boomer owners are busy running their businesses, they may not understand that over 70% of them, or 8.4 million businesses, will change hands in the next 10-12 years.
First To Market?
When an entrepreneur starts a business the concept of being “first to market” for a product or service has appeal and risks. But if you can successfully parlay your new product or service successfully, you can establish a strong advantage over your competition. Yes, being first has advantages.
Transaction Ready?
But what about that boomer owner who is going to compete with 8.4 million other owners in the same time frame to sell his business? Is he going to have a competitive advantage? Over 80% of baby boomer businesses are not "transaction ready" which means they are unlikely to find a buyer.
Becoming Transaction Ready
Beginning with the end in mind does require planning, effort, and coordination if a boomer owner (or any other owner) wants to sell his business successfully. While I’m not wild about some of these not so positive statements, here is one that sticks with me:
Of the small percentage of businesses that are successfully sold, over 70% fail to meet the expectations of the buyer – putting a lot of jobs at risk.
Becoming transaction ready does require a business transition exit strategy; one that involves a forward focus, one that has increased value and potential, one that can meet buyer expectations.
Business Management And Business Transition
A boomer owner probably does not have the time or inclination to both manage the business AND plan for its transition exit. Both activities involve a significant amount of time.
So, let me ask you, now that you are at the point in your ownership where it makes sense to plan the exit, does it make sense for you to continue running your business AND working with expert senior business consultants who can help develop the business transition exit strategy with, and for you? If you do, we should talk.
