Why your Business Needs to Run Without You
If you are looking to sell your company in the future, I would seriously recommend you consider the implications if your business is heavily dependent on you.
Many advisers will say it doesn’t matter. You can work with the new owner for a period and get through this, put in measures to compensate, develop staff and then move out. This is true. But it can be a barrier that makes some potential buyers think twice and, so should you.
Let me ask you a couple of questions:
- How will you feel about working for someone again, producing monthly reports for them and answering for your lack of sales to the new board? Chances are you didn’t create your business to end up asking people you hardly know whether you can do X or Y.
- Are you happy with a significant amount of the value someone pays for your business being paid perhaps 12 to 24 months after the sale and, subject to performance or other conditions? Ideally, you want to sell and move on, not worry about whether you’ll have to hand some of that hard-earned cash back a little further down the line.
It doesn’t mean you can’t sell your business if it’s dependent on you, and I know owners who have been in this this position and have either had no choice or had just had enough and were prepared to take the risk and go to market. Unfortunately, many admitted they could have done a better and less stressful deal had they been more prepared and not rushed it. Others were back to the drawing board because they failed to sell.
Here are 5 things you can do to reduce the reliance on you as the owner and, hopefully, avoid the complications above:
1. Have a succession plan
This could be highlighting someone from within the business, or recruiting externally, and coaching and supporting them to fill your shoes.
2. Make yourself redundant
Some owners struggle with this as they prefer to be hands on or care too deeply about the company they have built from the ground up. If you are looking to sell your business, however, you need to essentially get hands off. Empower others to do it. Now is the time to let go.
3. Introduce key performance indicators (KPI’s).
What gets
measured usually gets done. To make a success of this you should only measure what is really important. Potential buyers can then latch onto these as part of the road map for moving the company forward without you.
4. Look after your Key Staff
Incentivise high performing and essential staff to stay with your business and begin handing over key customer relationships to them.
5. Document the key positions in your business.
This will make it much easier to recruit and train your team when you need to, even if you aren’t considering selling. Most importantly they, and potential buyers, will know what is required of them when you are not around.
Final thoughts
Having a business that is not dependent on you is good for both sides. Buyers don’t have to worry about upsetting or demeaning the original owner and you can confidently hand over your company with less fear. For many owners, this can be a difficult thing to balance and get right. When you have put your heart and soul into developing a company, it’s difficult to let go of the reins and give over control to someone else.
The truth is, if you are planning to sell your business in the future, you need to ensure that it can operate without you. It will facilitate the process of selling and make sure you get a broader range of buyers who know they can take over without having to depend on your extensive experience and iron control. It may also save you money in the long run because your business is fit to change hands and the appropriate staff are all in the right place to make the buyout a success.
Every company is different; however, the starting point is understanding where you currently are, and where you need to be. Even if you are a few years away from selling, seek advice now from a reputable adviser who can guide you in implementing the keys above. It won’t take as long as you think and will make a significant positive impact on the final deal and terms you achieve.
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FAQs – Selling your company
How do I sell my business?
At Entrepreneurs Hub, we talk about five key areas that make the difference between success and failure when selling your business. Read more…
How much can I sell my business for?
Determining your business’s value is more than just calculating a number it’s complex with key factors, that said the basic equation is actually quite simple. Read more…
How long does it take to sell my business?
The timeline varies depending on the complexity of the deal and how ready the business is for sale. On average, the process takes around twelve months – sometimes less, sometimes more.
While preparing your business for sale, Entrepreneurs Hub conducts in-depth research to identify potential acquirers. You’ll have the opportunity to review and approve this list before we make any approaches. Once the business is fully prepared – often the most time-consuming step, we begin marketing it. Typically, you’ll start seeing initial interest within a few months, with follow-up meetings happening shortly after.
As these meetings progress – coordinated and facilitated by Entrepreneurs Hub, you’ll begin receiving initial offers. At this stage, we’ll help you assess the strategic fit between your business and potential buyers. When you decide to move forward with an offer, an exclusivity period begins, during which the acquirer conducts Due Diligence (DD).
The DD phase typically lasts two to three months, depending on the complexity of your business. Once complete, the sale is finalised, and you’ve successfully sold your company.
How do I sell my business quickly?
Selling a business quickly is possible, but speed shouldn’t come at the expense of value or deal security Read more…
When is the best time to sell?
Selling your business is a major milestone, and the start of an exciting new chapter, whether that means new ventures or a well-earned retirement.
In our experience, the best time to sell is when you don’t need to – when your business is performing well – not necessarily tied to the calendar. That said, timing can still play a role.
Timing the Market
Strong economic conditions, sector growth, and buyer confidence boost valuations. Don’t wait for a “perfect” market – a well-prepared, well-performing business sells in any climate.
Plan Ahead (12–18 Months)
The best outcomes come from early planning: clean financials, solid forecasting and growth potential.
Spring & Autumn Are Active Periods
The M&A market is typically busier in spring and autumn while summer and winter tend to be slower due to holidays and year-end distractions. However, the unpredictability of deals and negotiations makes this hard to target. We do deals all throughout the year – the key is to work with someone who can keep driving the deal forward whenever it happens.
Financial Year- End
Selling your business well is a long process and aiming for your financial year-end milestone is a virtually impossible task. But it is worth bearing your financial year in mind as buyers will want to review the most up-to-date accounts available.
The best time to sell is when your business is ready, and you are too. With the right preparation and positioning the right timing follows naturally.
Can I sell my business online?
Yes, you absolutely can sell a business online. Many platforms specialise in connecting business sellers with buyers. Read more…