Run A Business That Will Sell!
There are many books and articles written about how to implement and run a successful business. Until recently, however, not many authors have tackled the final, and maybe most important, phase of business ownership: selling the company.
Whether owners want to face it or not, every business will be sold, given away or liquidated and, since no one lives forever, every owner will leave. How business owners go about selling their businesses have far-reaching consequences for themselves, their families, investors and employees.
A new book we received in the North York Central Library business deparment addresses this topic head on. In his book, Finish Big: How Great Entrepreneurs Exit Their Companies On Top, business writer Bo Burlingham has penned a guide to selling a business that should be required reading for all entrepreneurs, whether they are just starting out or thinking of retirement. As Burlingham explains, hastily-planned exits seldom turn out to be happy ones. A good transition takes time--probably years not months--and business owners should constantly be reviewing whether their businesses are sellable.
Burlingham quotes a study done by the U.S. Chamber of Commerce that found "only 20 percent of companies put up for sale are ultimately sold, meaning four out of five prospective sellers walk away empty-handed. They learn that they have little or no chance of finding a buyer." This should be concerning to the plethora of baby boomers who will be putting their businesses up for sale in the next few years. As Burlingham stresses, how you leave determines whether or not you get what you want out of your journey of building a company--not just financially, but emotionally as well.
Fortunately, the author offers loads of advice on the selling process collected from dozens of interviews with people who have been through it. As David Crow writes in his Financial Times review: "(Finish Big) is full of case studies from the realm of 'real business', rather than the fasionable tech start-ups that garner so much attention... the stars of Finish Big are entrepreneurs who set up call centres, freight trucking operations, exhaust cleaning companies and industrial water treatment plants."
Burlingham points out that preparing to sell a business can significantly improve it because the owner is forced to ask some of the difficult questions about him/herself and the business. One company that did a four-year reorganization sold for four times the amount they had been offered before the reorganization.
A few more important tips in the book:
- You sell when the selling is good. Not when you think you'd like to. Otherwise, you run the risk of leaving a whole bunch of money on the table.
- Autocratic management can undermine the value of a company.
- Take the time necessary to determine whether your successor is the right person to run the company.
- * It's a terrible idea to manage the whole process yourself. You need an advisor with experience to guide the transaction
- There are software programs to help you assess the strengths and weaknesses of your business from an investor's perspective.
There is an old saying that goes: "You should build a business today as if you will own it forever but could sell it tomorrow." In Finish Big, Bo Burlingham gives us the framework to build such a business.
For additional books on the topic, Toronto Public Library has the following titles:
Note: Burlingham is also the author of Small Giants: Companies that Choose To Be Great Instead Of Good