Kelly Bullis
As more Baby Boomers who own businesses approach the final stage, which is selling the business, how many have really planned on how to make that happen?
Have you been dreaming about how much you think your business will sell for? Do you know how many have gone before you in having that bubble popped? One of my favorite business valuation experts likes to say, “Most small businesses are worth more dead than alive.” (Selling off the assets and the customer base and then closing the doors will get you more than a willing buyer would pay to keep the business operating.)
First question to ask in determining how much your business is worth is to ask, “What would you pay for the business so that after paying for it, there is enough income still on the table to make the work worth it?” Too many folks don’t realize that their business is really an alter-ego of themselves. Just a job where they are their own boss. Who would pay a lot of money to get a job?
Your business MUST become a self-running profit center that a buyer would not have to step in with your level of expertise to run successfully. That means you have key employees, and good working, common sense systems in place that the business runs the same whether you are there or not. How many of you can honestly say your business would run as well if you weren’t there?
So now, you should be seeing the solution to getting a nice profit from selling your business. It has to stop being your job and become a self-running successful company. You need good employees/managers and systems that keep the business running your way even when you are gone. That is attractive to a buyer.
Secondly, this needs to be in place for at least five, even better, 10 years with a strong historical proven track record of consistent profitability. (You must have a good accounting system in place!)
Another key item most folks don’t even think about. The business has to have its own financial track record, banking relationships, borrowing power, etc., without needing the personal guarantee of the owner. That’s all about Dunn and Bradstreet ratings. Current loans are 100% on the business without any personal guarantee from you. How many of you can say your business has arrived at that point?
So, after an honest evaluation of where you are right now, if you’re not there yet, get started to make it happen. Start creating systems. Start grooming key employees as managers who know how to run the business your way. They might even become the buyer someday.
Have you heard? Isaiah 47:15 says, “Such to you are those with whom you have labored, who have done business with you from your youth; they wander about, each in his own direction; there is no one to save you.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.