10 Thinks To Learn About The Process Of Selling Your Business with Coach Wendy Dickinson
Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron
Concept 1: Grow A Business To Sell
In the How to Exit podcast, Wendy Dickinson, a business coach, discusses the importance of growing a business to sell. Wendy's experience as a therapist and co-founder of a successful business has taught her the value of planning for the future and understanding the ins and outs of business ownership.
Wendy's father's experience turned business owner taught her the importance of having a plan and knowing what you don't know. Her father's lack of knowledge about running a business led to his downfall, and Wendy was determined not to make the same mistakes.
Wendy's career as a therapist gave her insight into the importance of understanding people and their motivations. This understanding has helped her in her work as a business coach, where she helps business owners navigate the complexities of owning and growing a business.
Wendy's experience co-founding a business with the goal of selling it has given her firsthand knowledge of what it takes to prepare a business for sale. From day one, Wendy and her partners knew they wanted to grow the business to sell it. They set goals and looked for signposts that would indicate the business was ready to be sold.
One of the key takeaways from Wendy's experience is the importance of planning for the future. Whether you're starting a business or already own one, it's important to have a clear understanding of your goals and how you plan to achieve them. This includes understanding the value of your business and what it takes to prepare it for sale.
Overall, Wendy's advice is clear: if you want to sell your business, you need to plan for it from the beginning. This means setting goals, understanding your business's value, and taking steps to prepare it for sale. With the right planning and preparation, you can maximize the value of your business and achieve a successful exit.
Concept 2: Choose Target Acquirer Early
One key piece of advice that Wendy offers is to choose your target acquirer early on. By identifying the company or type of buyer that would be most interested in your business, you can tailor your operations and strategy to meet their needs. This can make your business more attractive to potential buyers and increase your chances of a successful sale.
Wendy's own experience with selling her business, Document Warehouse, illustrates the importance of choosing a target acquirer. She and her partner identified Iron Mountain as their ideal buyer and focused all of their efforts on meeting their needs. This strategy paid off when Iron Mountain ultimately acquired their business.
Of course, not every business will be able to sell to their target acquirer. As Wendy notes, the chances of a successful sale are relatively low, and there are many factors that can influence the outcome. However, by focusing on a specific buyer from the outset, you can create a clear vision for your business and make strategic decisions that will increase its value.
In addition to choosing a target acquirer, Wendy recommends that businesses run themselves as if they were for sale from day one. This means keeping detailed records and documents, updating them regularly, and making sure that everything is in order. By doing so, you can ensure that your business is always ready for sale, whether you decide to pursue a sale or not.
Overall, Wendy's advice is valuable for any business owner who is thinking about selling their business. By choosing a target acquirer early and running your business as if it were for sale, you can increase your chances of a successful exit and maximize the value of your business.
Concept 3: Document Business Cycles
One important aspect of preparing your business for sale is documenting its business cycles. This means keeping track of the ups and downs in revenue, analyzing the factors that contribute to these fluctuations, and documenting the steps you took to address them. By doing so, you can create a comprehensive history of your business that prospective buyers can use to evaluate its resilience and potential for growth.
For example, if you know that your business tends to have slow periods during certain times of the year, you can plan accordingly by adjusting your operations or marketing efforts. By documenting these trends and your responses to them, you can demonstrate to potential buyers that you have a deep understanding of your business and are prepared to weather challenges.
Another benefit of documenting your business cycles is that it can help you identify areas for improvement and growth. By analyzing your data and identifying patterns and trends, you can make informed decisions about where to invest your resources and how to optimize your operations.
Ultimately, documenting your business cycles is an important part of preparing your business for sale. By creating a comprehensive history of your business that includes both its successes and challenges, you can demonstrate to potential buyers that you have a solid foundation for growth and are prepared to navigate the ups and downs of the market.
Concept 4: Get A Business Broker
However, not all business owners are aware of the importance of cash flow analysis and documenting their business cycles. In fact, many don't even know what it is. Even their CPAs may not be of much help as they may not understand what is required. This is where the role of a business broker comes in.
A business broker is a professional who specializes in buying and selling businesses. They have the expertise and experience to guide business owners through the complex process of selling their business. They handle the tire kickers, filter out those who are wasting time, and identify potential buyers who have the financing to buy the business.
While some small business owners may think that they can handle the process themselves, it is important to understand that selling a business is a specialization. It is something that requires training and experience. A business owner may not know what they don't know and may end up leaving money on the table or worse, not being able to sell the business at all.
It is also important to note that selling a business is not a race, but a marathon. It takes time and effort to prepare the business for sale and to find the right buyer. This is where documenting business cycles and having a cash flow analysis comes in. By understanding the highs and lows of the business, a business owner can identify the best time to sell and prepare accordingly.
In conclusion, getting a business broker is a crucial step in selling a business. They have the expertise and experience to guide business owners through the complex process of selling their business. By working with a business broker, business owners can ensure that they get the best possible price for their business and that the process is as smooth as possible.
Concept 5: Choose Experienced Help To Sell
However, it is important to choose experienced help when selling a business. This means finding a broker who has a long line of satisfied clients and a track record of getting deals done. It also means finding an attorney who has experience in mergers and acquisitions, as not all attorneys are equipped to handle the complexities of selling a business.
One of the reasons why it is so important to choose experienced help is that selling a business is not an easy process. Less than 20% of all businesses that are listed for sale actually end up selling, and a lot of that is due to inexperienced brokers who take on businesses that are not quite ready or have not put in the groundwork to make them sellable. Additionally, inexperienced brokers may not be willing to tell business owners that their asking price is too high, which can lead to unrealistic expectations and ultimately kill the deal.
Another reason why it is important to choose experienced help is that there are many legal and financial considerations that need to be taken into account when selling a business. For example, the purchase and sale agreement can be very complicated, with many different terms and conditions that need to be negotiated. An experienced attorney can help ensure that the agreement is fair and protects the interests of both the buyer and the seller.
In conclusion, selling a business is a complex process that requires experienced help. Business owners should take the time to find a broker and an attorney who have a track record of success in mergers and acquisitions, and who have the expertise and experience to guide them through the process. By doing so, they can ensure that they get the best possible price for their business and that the process is as smooth as possible.
Concept 6: Prepare for an Identity Crisis
However, it's important to note that selling a business can also lead to an identity crisis for the owner. For many business owners, their identity is closely tied to their business, and letting go of it can be a difficult and emotional process. It's important for owners to prepare themselves for this possibility and to have a plan in place to deal with it.
One way to prepare for an identity crisis is to start separating oneself from the business long before the sale. This can involve delegating tasks to others, building a strong team, and focusing on other aspects of one's life outside of work. It's also important to have a conversation with one's partner and family members about the upcoming sale and how it may impact everyone involved.
Another important step is to have a plan in place for what comes next. This can involve exploring new hobbies, pursuing new business ventures, or simply taking time to relax and enjoy life. It's important to have a sense of purpose and direction after the sale, as this can help to mitigate the feelings of loss and uncertainty that may arise.
Finally, it's important to seek out support during this time. This can involve talking to a therapist, joining a support group, or simply reaching out to friends and family members for emotional support. Selling a business can be a stressful and emotional process, and having a strong support network can make all the difference.
In conclusion, preparing for an identity crisis is an important part of the process of selling a business. By taking the time to prepare oneself emotionally and mentally, and by having a plan in place for what comes next, business owners can ensure a smoother transition and a more positive outcome.
Concept 7: Empower Management For Independence
One crucial aspect of preparing for a business sale is empowering management for independence. This involves creating an operating system for the company that allows it to operate independently of the owners. This system includes identifying the company's vision, ensuring that the right people are in the right seats, documenting all processes, and establishing key performance indicators.
Empowering the management team is critical in ensuring that the company can continue to operate smoothly and successfully even after the owners have stepped back. This involves creating a management team that is empowered to make decisions and take charge of different areas of the company. The team should be aligned with the company's vision and be able to make sure that all decisions are in support of the ultimate goal.
To achieve this, business owners need to be willing to step back and allow the management team to take charge. They need to resist the urge to jump in and micromanage, even when they see mistakes being made. Instead, they should use these opportunities to empower their team and help them learn and grow.
One effective way to do this is to take time off and allow the management team to run the company independently. This gives them the opportunity to make decisions without the owners' involvement and to see how the company operates without their input. This process can help identify areas that need improvement and provide valuable feedback for the owners.
Empowering management for independence is an essential part of preparing for a business sale. It ensures that the company can continue to operate successfully even after the owners have stepped back. By creating a management team that is aligned with the company's vision and empowered to make decisions, business owners can ensure a smoother transition and a more positive outcome.
Concept 8: Separate Business From Personal Identity
However, separating business from personal identity is not just important for preparing for a sale. It is also crucial for maintaining a healthy work-life balance and avoiding burnout. In our society, we often tie our identities to what we do for a living. When asked who we are, we tend to respond with our job title rather than our personal interests or relationships. This can lead to a dangerous mindset where our self-worth is tied to our productivity and success at work.
It is important to remember that we are more than just our jobs. We are complex individuals with unique personalities, passions, and relationships. By separating our personal identity from our work identity, we can create a healthier mindset and a more fulfilling life outside of work.
The same goes for businesses. A company's identity should be separate from its owners. It should have a clear vision, mission, and values that are independent of any one individual. This not only makes the company more attractive to potential buyers but also creates a more stable and resilient organization.
Creating a strong management team that is aligned with the company's vision and empowered to make decisions is a crucial step in separating business from personal identity. This allows the business to continue operating successfully even after the owners have stepped back. It also creates a culture of independence and accountability that can benefit the company in the long run.
In addition, separating business from personal identity can also benefit networking efforts. When business owners refer to their company rather than themselves, it creates a more professional and credible image. It also allows the company to stand on its own merits rather than relying solely on the reputation of its owners.
Overall, separating business from personal identity is an important step in creating a healthy work-life balance, preparing for a sale, and creating a strong and resilient organization. By empowering management for independence and creating a clear and independent company identity, business owners can ensure a smoother transition and a more positive outcome, both for themselves and for their company.
Concept 9: Create A Sustainable Business Operating System
The podcast discussion centers around the importance of creating a sustainable business operating system. The speakers emphasize that it is crucial for business owners to create an identity for their company that is separate from their personal identity. This is especially important when preparing for a sale or passing the business on to the next generation. By doing so, the business becomes a sustainable entity that can operate independently of the owner.
The speakers agree that it is important to have an operating system in place from the very beginning of the business. This includes creating an identity for the business that is separate from the owner. This allows for the business to be sustainable and empowers decision-makers within the organization. It also creates a sense of authority that can be shared among key positions within the company.
The speakers suggest that there are certain key elements that need to be in place before considering any type of succession or sale. These include having an operating system that is sustainable, empowering decision-makers, and sharing authority among key positions. The speakers also suggest that it is important to prepare the next generation if the business is to be passed on. This includes creating an operating system that can operate independently of the owner.
The speakers also discuss the importance of having proper accounting practices and systems in place. Many small business owners may not have been taught proper accounting practices and may not have an advisor or broker to help them. However, the speakers suggest that reading books like Traction, the E-Myth Revisited, and The Great Game of Business can help small business owners gain a better understanding of how to create a sustainable operating system.
In conclusion, creating a sustainable business operating system is crucial for the success and longevity of any business. By separating business from personal identity, empowering decision-makers, and sharing authority among key positions, business owners can ensure a smoother transition and a more positive outcome for themselves and their company. Proper accounting practices and systems are also important in creating a sustainable operating system. By implementing these practices, business owners can create a strong and resilient organization that can operate independently of the owner.
Concept 10: Exit Planning And Business Systems
Furthermore, exit planning is an essential aspect of running a business, as it ensures a smooth transition when the time comes for the owner to step away. Wendy Dickinson, an executive coach and business consultant, emphasizes the importance of deciding early on how one wants to exit their business. This decision will inform the steps taken to prepare for the exit, such as identifying potential successors, developing a succession plan, and ensuring that the business is financially stable and profitable.
In addition to exit planning, Dickinson emphasizes the importance of keeping one's life partner informed and involved in the process. Communication is key, and by keeping one's partner in the loop, business owners can ensure that their personal and professional lives remain balanced and that they have the necessary support during the transition.
Overall, exit planning and business systems are critical components of running a successful and sustainable business. Business owners who prioritize these aspects of their organization can ensure that their company will continue to thrive long after they have moved on. By implementing a strong operating system, practicing proper accounting, and planning for the future, business owners can secure their legacy and ensure that their hard work and dedication will continue to benefit their company and their community.
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