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 in the UK?
Selling a business in the UK typically involves preparing financial information, obtaining a valuation, identifying suitable buyers and negotiating the terms of a sale. Most owners work with an M&A adviser to manage the process confidentially, approach qualified buyers and maximise the value achieved.
At Entrepreneurs Hub, we talk about five key areas that make the difference between success and failure when selling your business. Read more…
What is my business worth?
A business is typically valued by applying a multiple to its sustainable profit, often EBITDA or adjusted net profit. The appropriate multiple depends on factors including growth, recurring revenue, customer concentration, management strength, owner dependency, market conditions and buyer demand.
Determining what your business is worth involves more than applying a simple formula. Use our Business Valuation Calculator to obtain an initial valuation range, or read our simple business valuation guide to understand the factors buyers consider.
How long does it take to sell a business?
Selling a business in the UK typically takes around 12 to 18 months from initial preparation to completion, although some transactions may be quicker or take longer. The timeline depends on business readiness, buyer demand, deal complexity, due diligence and how quickly the legal terms can be agreed.
Preparing accurate financial information and organising key documents in advance can help reduce avoidable delays. Read our complete business sale timeline to understand what happens at each stage.
When is the best time to sell a business?
The best time to sell a business is usually when it is performing strongly, its future growth is clear and you are not under pressure to complete a sale. Buyers are generally more attracted to businesses with rising or stable profits, reliable financial information and credible opportunities for further growth.
Business owners are often in a stronger position when:
- Revenue and profits are growing or consistently strong
- Financial records are accurate and up to date
- Future growth opportunities can be clearly demonstrated
- The business is not overly dependent on the owner
- There is a capable management team in place
- The owner has started preparing well in advance
Market conditions can also affect buyer appetite and valuation. Factors such as sector growth, access to finance and competition between buyers may support stronger deal activity, but preparation and business performance are usually more important than trying to identify a perfect month to sell.
Ultimately, the best time to sell is when both you and the business are ready, and the company can demonstrate sustainable performance and future value to potential buyers.
Use our Exit Readiness Tool to assess how prepared your business is, or read our guide on when to sell your business for further guidance.
Do I need an adviser to sell my business?
You are not legally required to use an adviser to sell your business, but many owners appoint an experienced M&A adviser to help manage the process. An adviser can prepare the business for sale, identify and approach suitable buyers confidentially, coordinate negotiations and support the transaction through due diligence.
The right adviser can also help create competitive tension, protect your time and reduce the risk of avoidable mistakes. Read our guide to choosing the right business sale adviser to understand the different types of support available.
How do I prepare my business for sale?
Preparing a business for sale involves strengthening its financial performance, reducing risk and making sure it can operate successfully without heavy reliance on the owner. Buyers will also expect accurate financial records, clear contracts, organised documentation and evidence of future growth.
Preparation should ideally begin well before approaching the market, giving you time to address weaknesses that could affect value or delay the transaction. Use our Exit Readiness Tool to assess how prepared your business currently is.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymised buyer approaches and non-disclosure agreements. Potential buyers usually receive limited information at the start of the process and must sign an NDA before commercially sensitive details are released.
Prospective buyers should be assessed before receiving further information, with documents shared gradually according to their level of interest and credibility. A well-managed process also allows the business owner to retain oversight of who is approached and what information is disclosed.
What documents do I need to sell my business?
The documents needed to sell a business commonly include financial accounts, management information, forecasts, customer and supplier contracts, employment records, tax information and evidence of intellectual property ownership.
Buyers may also request details of property, insurance, legal disputes, regulatory matters and company ownership. Organising this information before due diligence begins can reduce delays and help maintain buyer confidence. Our Business Sale Due Diligence Checklist explains the main information buyers are likely to request.
What’s the quickest way to sell a company?
Selling a business quickly is possible, but speed shouldn’t come at the expense of value or deal security Read more…
What’s the best way to sell a business online?
Yes, you absolutely can sell a business online. Many platforms specialise in connecting business sellers with buyers. Read more…
How can I increase the value of my business before selling?
You may be able to increase the value of your business by improving sustainable profits, developing recurring revenue and reducing reliance on individual customers or the owner. Buyers also value capable management teams, reliable financial reporting, scalable operations and clear opportunities for future growth.
The earlier you identify the factors affecting value, the more time you have to make meaningful improvements. Use our Business Valuation Calculator for an initial indication of value and our Exit Readiness Tool to identify areas that may need attention.