Entrepreneurs often create startups with the plan to sell it when conditions are right. Others have a strategic plan where they operate the business until they retire, and then some have no plan so they are pulled out from behind their desks to be buried. Getting out of a business isn’t always about working until you retire. When you quit having fun, doesn’t that tell you something?
The OE Factor
A business has a life cycle determined by the OE Factor: owner energy factor. Many small business owners are the energy in the business. They provide the necessary push to keep things moving forward. When they start to lose focus or the energy to get up every day and put the business’s harness on their shoulders, everything starts to slip. What took a decade to create can deteriorate in months.
A small business has many ways to cash out. Certainly, liquidating your assets is an option. What your stuff is worth largely depends on what business you’re in. This method doesn’t create any rewards for customer loyalty or the good-will the business might have. It is an easy way out if you’re not having fun anymore or are losing sleep when the bankers call.
Becoming Bait & Selling the Business
Selling the business requires you to get out of the box with your thoughts and deal with the reality of your situation. If at all possible, it is best to sell when business is good, but that’s not always the case.
If you hang on too long and in the last hour decide to sell, a strong competitor might just wait you out vs. buying you out.
You’ve got to know the value of your business that’s not through rose-colored glasses. Every business owner who built it from scratch thinks their business is worth more than anyone else will, that’s normal. A buyer looks through a different set of eyes. A clean set of financials with some historical data showing a track record is a must. You might even seek outside guidance to help position you and your business to receive maximum value. Traditionally, small business owners have expertise, but selling a business isn’t one of them. Remember, the old desk or paper files are not worth what they weigh.
Decide to Acquire Others- Become a Shark
Every business needs to have a written plan. This becomes a tool to measure success and make decisions. When you decide that you will acquire another business as part of your future plans, this opens up numerous thoughts and ideas, especially about what to do with your current company.
You have to make sure your first business is ready. If your business has the OE Factor, then how do you replace yourself? If you think you can lead both places like you have your first one, snap, wake up. There are a hundred reasons why this doesn’t make sense and a thousand business owners before you who have failed.
When you have a reliable team of proven leaders that you’ve empowered, ok, now I start to get excited with you buying another business like yours. If you want to buy a business that isn’t something you have experience with, call me, we need to talk it through. I do think core competences to run a particular business adapts over to other models for sure. I’ve also seen business owners shift what business they are in and succeed more than they did with their original one.
Maybe the low-margin competitor is your first target? Considering your age and various other vital strategic factors, having a five-year written strategy allows you to know your options when they appear.
To become a business that expands through acquisitions, start saving for your war chest now. Expansion requires investment and working capital. With each revenue dollar, put a percent of it back into this war chest so that when an opportunity comes forward, you are financially ready. Know your competition and not just through what you hear from others. Do some fact-checking and make a profile of the businesses. The more you know, the easier it is to make predictions about whether or not that business fits your expansion plans.
Decide What Kind of Business You Are In – Magnify Focus
You might be a low margin seller and have found your place in the market. This model works exceptionally well when the owner makes a conscious decision about running the business this way. They are able to focus their energy and passion for sometimes extraordinary results.
Are you the lowest price and best service business in your market? Are you the highest price and highest quality service business? Are you the lowest price and lowest quality service business? You are one of these or a combination. Pick which one is the most profitable and has the most fun. It’s not a hard choice to figure out. When you define your purpose and your vision, it unleashes focus.
Low margin businesses may not be able to afford high-quality service. You can out service a low margin business, but you have to be profitable to make it happen. These servicing points require innovation, talented people, and the use of modern technology.
Every entrepreneur wants a business where we can sell things for a high margin, with little costs to make, and have little worry about customer satisfaction after they buy. We want that customer to come back again to buy the same product or something else we offer so that whole scenario starts to paint a different picture of what business development strategies work best.
With a long-range strategic plan, and creating width and depth in talented people unleashed through progressive processes, a company can take advantage of opportunities created by market shifts.
High profit and high-performance companies have the clout and the financial means to be what they want to be. They are normally laser-focused and build teams of people who share a common goal. These companies can withstand the pressures of market swings caused by a virus or most anything else.
Choosing to Live a Dynamic Lifestyle
Having a successful business and an enjoyable lifestyle is a winning combination. Living this dynamic life creates many options because you can afford to emotionally and financially. You may be miles ahead of owners who’s whole life is the business because you like to go home. You like being with your husband/wife and kids. You have hobbies outside of work. You can financially afford to do pretty much want you to want.
Life changes for us due to aging and experiences, so it is not abnormal to change your mind about what you want or how you want it, or even when you want it. Using all the tools at our fingertips allows us to achieve our financial goals and our life objectives.