You’ve worked hard, built up a good customer base and established a profitable niche for your business, but is it actually worth anything? Would anyone buy your business?
Recently I was talking to a GP who had run his own busy surgery for many years. He was contemplating retirement and I asked him his plans for the business.
His response was that when it came time to move on he’d most likely just refer his patients elsewhere and shut the door. Apparently, selling would not be easy. It made me think that after 20+ years in business, it’s a shame he has nothing tangible to show for it.
This got me thinking about my own business. I’ve had my own copywriting business now for over seven years. When I started I never gave much thought to selling it. And I still haven’t. I deal with all my clients personally, and the business bears my name, so it’s a tough, if not impossible, sell in its current form.
I wonder if things would be different if I’d considered a potential future sale from the beginning and structured things differently.
One way to make money from a business is by taking cash out along the way (like collecting rent). An alternative way is to grow the financial value of the business itself (like renovating). Ideally, you’d be able to do both – generate solid profits each year and then sell out for a pretty penny when you’re ready to move on.
Based on my experience, many solo and micro business owners like myself, focus mainly on generating short-term cash flow income rather than on building a long-term asset. This seems to be particularly true of service businesses.
Do you plan on selling your business down the track? What can you do to make your business valuable to a potential buyer? We’d be interested to hear your thoughts.