The Sunbelt New Mexico Blog

What Do You Need to Do to Get Your Business Ready to Sell?

In his recent article in Smart Business entitled, “How to get your business, and yourself, ready for sale,” author Adam Burroughs explores the key points of getting your business ready to sell.  Burroughs points to the truism that, at some point, almost every business owner must sell his or her business.  For this reason, it is critical to think about what it takes to get your business ready to sell.  Simply stated, it is best to explore and plan for selling your business long before you actually need to place your business on the market.  Let’s explore some key points for selling your business.

Broadening Your Options

Burroughs interviews Scott McRill at Clark Schaefer Hackett.  McRill notes, “The sooner you think about your exit, the more options you’ll have for yourself and the business when the time comes.”  A savvy business owner will always want to give himself or herself as many options as possible. McRill wisely points out that early planning is key, and a failure to engage in early planning could lead to a lower selling price.  If you want to get the best price for your business, then planning for the eventual sale as far in advance as possible is a good move.

Planning in Advance

According to Burroughs, business owners should start planning to sell their business at least 2 to 3 years before they actually plan to sell.  Part of the reason for this is so that business owners will have enough time to make operational improvements designed to maximize the business’s overall value.

A Financial Review

At the top of every business owners “preparing to sell” list is to have a third-party review the business’s financial situation.  This is excellent advice for, as frequent readers of this blog know, any serious prospective buyer will look long and hard at your business’s financials.  Getting your business’s financial house in order means that you should turn to an accounting firm for help.  You’ll want to review financial statements for at least the previous 2 to 3 years. This will be a crucial step in arriving at your optimal valuation.

Burroughs points out that when it comes to selling a business, there are many variables that business owners often overlook.  At the top of the list is the management team.

Your Management Team

Prospective buyers can get very nervous about the stability of the management team once ownership has changed hands.  Often, the new buyer may only sign on the dotted line if the owner agrees to stay on after the sale during a transition period.  Having a competent and proven team in place, one that is dedicated to staying with the company will help you get your business ready to sell.

There are a lot of variables involved in preparing to sell a business.  The sooner that you get experts involved in the process, the better off you will be.  A business broker can serve as a guide – one that can point you in the right direction.  Find a broker with an abundance of experience, and you’ll have an invaluable ally who can help you navigate the process.  It can take a lot of time and effort to sell a business.  Working with a business broker can keep you from reinventing the wheel at every step of the process.

The Year to Come?

Heading into 2020, it feels like a good time to share this infographic tweeted by MIT’s Sloan Management Review and created by futurist Amy Webb. Is your business poised to seize the [next] day? This graphic provides an actionable step-by-step guide to forecasting changes in the social, cultural, and economic landscapes that impact your business and preparing to take advantage of them. Obviously no predictive system is perfect, but it can be a helpful exercise to alternate your approach from time to time. Even if you’re not in big tech, it can’t hurt to consider your business’ and clients’ potentially shifting needs with a fresh perspective. Happy New Year and best wishes for a prosperous 2020!

Encouraging Employee Engagement

Employee engagement is a hot topic in workplace research. According to a recent Gallup survey,

“The percentage of ‘engaged’ workers in the U.S. — those who are involved in, enthusiastic about, and committed to their work and workplace — is now 34%, tying its highest level since Gallup began reporting the national figure in 2000. The percentage who are ‘actively disengaged’ — workers who have miserable work experiences — is now at its lowest level (13%), making the current ratio of engaged to actively disengaged employees 2.6-to-1 — the highest ever in Gallup tracking. The remaining 53% of workers are in the ‘not engaged’ category. They may be generally satisfied but are not cognitively and emotionally connected to their work and workplace; they will usually show up to work and do the minimum required but will quickly leave their company for a slightly better offer.”

While the engagement increase is good news, it’s still quite likely that something like two thirds of your team is not at peak potential.

Does it matter?

Emphatically yes, according to Kevin Kruse, author of Employee Engagement 2.0. In this Forbes article, he presents arguments from 28 studies detailing the positive impacts of employee engagement. Employee engagement correlates positively to improvements in service, sales, quality, safety, retention, and profit and share holder return.

For instance,

A study of 64 organizations revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement. (Source: The Impact of Employee Engagement. Kenexa)

Gallup’s research finds that 70% of the variance between engaged and disengaged teams comes down to management and/or leadership. This has some big ramifications if you are a business owner. It’s probably worth your while to seriously consider the culture of your business and how to facilitate a sense of commitment and motivation in your team.

How to go about this?

Purpose emerges in the research as a crucial factor. Employees report far higher levels of engagement when they understand the mission of the company and feel their work advances the cause in a significant way. They also need to feel a pathway exists for them to learn, develop new skills, and advance personal goals. According to Deloitte,

We need to make sure jobs are meaningful, people have the tools and autonomy to succeed, and that we select the right people for the right job. This is anything but a simple undertaking…We each thrive on our ability to contribute to a greater good, and management’s job is to set goals, support people, coach for high performance, and provide feedback to continuously improve.

Training, trust (and the other side of its coin, accountability), team, and work-life balance all contribute to a sense of fulfillment as well.

Leadership strategy expert Brent Gleeson outlines these check point questions that your team should be able to answer positively:

  • I know what is expected of me and my work quality.
  • I have the resources and training to thrive in my role.
  • I have the opportunity to do what I do best – every day.
  • I frequently receive recognition, praise and constructive criticism.
  • I trust my manager and believe they have my best interests in mind.
  • My voice is heard and valued.
  • I clearly understand the mission and purpose and how I contribute to each.
  • I have opportunities to learn and grow both personally and professionally.

Onward and Upward

While valuable, facilitating change in your work culture is not a simple undertaking. Gleeson warns that leaders should be prepared for challenges in trying to cultivate work culture. “Change is hard, takes longer and usually has higher hard and soft costs than managers and leaders generally plan for. Change can be intensely personal for employees, causes fear and can actually reduce productivity when approached improperly,” he says.

But don’t be daunted, especially if you are planning to sell your business at some point. A well-developed team who will support the mission even when ownership conveys is a major selling point.