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.
Similar Insights
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 using a multiple of its profit, usually EBITDA or adjusted net profit. The multiple depends on factors such as growth potential, recurring revenue, customer diversification and management strength. Professional valuation provides a realistic price range and helps position the business effectively for buyers.
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 a business?
Selling a business in the UK typically takes between six and nine months from preparation to completion. The timeline depends on business readiness, buyer demand and the complexity of due diligence. Early preparation and clear financial reporting can help shorten the process.
When is the best time to sell a business?
The best time to sell a business is when it is performing strongly, growth prospects are clear and you are not under pressure to sell.
Business owners often achieve the strongest outcomes when:
-
Profits and revenue are growing
-
Financial records are clear and well prepared
-
There is visible future growth for buyers
-
The owner has planned the sale 12–18 months in advance
Market conditions can also influence valuations. Strong buyer demand, sector growth and favourable economic conditions can increase acquisition activity, but a well-prepared business can attract interest in most markets.
Deal activity often increases during spring and autumn, although transactions complete throughout the year. In practice, preparation and business performance usually matter more than trying to perfectly time the market.
Ultimately, the best time to sell is when both the business and the owner are ready, with the company positioned to demonstrate strong value to potential buyers.
Do I need an adviser to sell my business?
Many business owners choose to work with an M&A adviser to manage the sale process. Advisers help value the business, approach qualified buyers confidentially and negotiate terms. This structured approach can increase the likelihood of achieving a higher value and a successful transaction.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymous buyer approaches and strict non-disclosure agreements. Potential buyers receive limited information initially and must sign an NDA before any sensitive details are released. Business owners approve prospective buyers and maintain visibility over all documentation throughout the process.
How do I value my business before selling?
Valuing a business before selling usually involves analysing profitability, identifying valuation multiples and assessing key value drivers such as recurring revenue and customer concentration.
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…