Whether you want to stop working and enjoy freedom from everyday pressures—or you’re ready to move on to another career or business—there are good, better, and best ways to prepare. We’ll tell you how, so you can decide if there’s an acquisition in your near future.
Many business owners don’t plan their exit, or end game, when they launch their company. Even when they do plan to sell, they usually haven’t determined their desired sales price or range. Most entrepreneurs and franchise owners don’t think of selling until they’re forced to. Boredom, poor performance, or a catastrophic event: these are the worst times to sell.
The best time to sell is when your business is doing well and trending up.
Build Your Perfect Sale with the Seiler Tucker (ST) GPS Exit Model™
At Seiler Tucker, we specialize in working with business owners early in their entrepreneurial journey so they can identify the perfect time to exit their business. To do so, we use the ST GPS Exit Model. This step-by-step process serves as a roadmap of how you should build your business from day one. This model helps you create the framework for building, scaling, and then selling your company. It will also help you keep your effort and energies focused on your desired end game.
The ST GPS Exit Model:
- Determine your destination (desired sales price)
- Know your current location (the value of your company)
- Identify who your buyers will be
- Know your timeframe
- Determine your why
GPS Exit Step One: Determine Your Destination
What sales price will bring you joy while also reflecting the actual value of your company? Almost every business owner comes to us with a price in mind, and that price is usually based on hopes and dreams; it’s based on the amount they need to get out of debt or to use for the next chapter of their lives.
Instead, determine an achievable destination and create a roadmap to get there.
If you try to navigate your business without a roadmap to your destination (sales goal), you’ll end up driving aimlessly in circles, meandering up and down financial hills, and not enjoying the journey—not to mention never reaching your destination!
GPS Exit Step Two: Know Your Current Value
It’s imperative that you know where you’re starting from: your current valuation. Work with an expert M&A advisor or business broker on an annual basis to look under the hood of your business, determine your current value, and inspect your six P value drivers: people, product, process, proprietary, patrons, and profit.
Then, you must tune up what’s necessary to keep driving toward your final destination. Most owners don’t get their business valued until they’re thinking about selling it. Don’t be one of those owners!
The only way to get your desired sales price is to offer a company that’s performing at optimum value, has a realistic valuation of assets, and a cash flow that supports your dream price. You need to check on your business’s fiscal health throughout its lifetime, not just at selling time.
GPS Exit Step Three: Know Who Your Buyers Will Be
You’ve invested your money, energy, and resources to target your ideal customer and entice them to purchase your goods or services. So why not invest as much in targeting the ideal buyers who will one day purchase your most prized possession, your business?
Build your business to suit those buyers’ specific buying criteria. It’s important to conduct your due diligence from the beginning. Research your industry, know who your competitors are, and find out who’s buying them.
GPS Exit Step Four: Know Your Timeframe
Timing is everything. Once you’ve determined your desired sales price and your buyer’s criteria, determine the timeframe for building your business so it can sell for your desired price.
Timeframes will differ depending on the person and the business. For example, if you’re a younger business owner who wants to retire at 50 or 60, that could be a 20- to 30-year timeframe. If you’re a business owner in your 50s, you may have a 10-year timeframe in mind.
GPS Exit Step Five: Determine Your Why
It’s hard to figure out what your ultimate goals are when you’re overwhelmed on a daily basis, which makes it imperative to set goals and determine what you really want. You must identify and stay true to your why if you want to stay on course, regardless of everyone and everything that is trying to deter you.
Setting a goal is easy. Accomplishing it can be more difficult.
Let’s face it: if it were easy to sell your business for $50 million, everyone would do it. However, most business owners don’t reach their dream price because they left out the most important ingredient: their why.
You can’t bake a cake without flour. If you did, your cake would never rise. The same is true with your business. If you leave out the key ingredient, your why, the sales price will never rise to your desired expectations. You also need to remember that if you want to sell your business someday for $50 million, you must build a business that’s valued at $50 million.
If your goal doesn’t scare you, it may not be high enough.
You might think, “I don’t have the answers, competencies, or skill sets to reach this goal.” If you know all the answers, you’re on the wrong path and you won’t experience any growth along the way. Once your high goals are clear and your roadap is in front of you, magic can happen!
Bringing It Together
If you want to sell but know that right now your company isn’t worth the sale price you need or want, here’s some advice: “Hold and grow, then sell and go.”
You need a specific plan if you want to sell your business at an optimal price. You also need to create an environment where employees want to stay, your company is able to continue without you, you have a strong, sustainable customer base, your brand and reputation are solid, and your financials are in impeccable shape.