James D. Shields, Contributing Writer
Many entrepreneurs assume that what made them successful will translate into a lucrative sale of a company, but selling a business is a much different proposition than building it.
“Entrepreneurs are experts at creating, nurturing and growing their businesses,” I recently told a group of private business owners during a luncheon for successful entrepreneurs.
Heads nodded in agreement.
“You know how to grow your business or you wouldn’t be sitting here,” I continued, gauging my audience’s reaction as positive.
“Weren’t you methodical, deliberate and strategic when you grew your company to its current success?”
The rhetorical question was met with more acknowledgment.
“Remember all of those sleepless nights, the mistakes you made, and the time and energy you invested to become the success you are today?”
This statement actually caused several people to laugh out loud and shake their heads.
Then I landed the bombshell.
“The mindset you used during the creation and growth of your business does not work when you want to sell it.”
Silence came down as CEOs glanced away, pondering my statement.
I let the silence continue for several beats, and then added, “There are three steps you must take before even beginning to consider selling your business.”
I now had their full attention and shared the following:
1. What is your strategic plan?
There are three main questions ask when preparing your strategic plan:
- What problems are you trying to solve?
- What are your personal and business objectives?
- Can you create alignment between these objectives?
The resolution of these questions forms the foundation of your strategic plan, which guides your decisions as you move through the transition phase of your business. Think of your strategic plan as your roadmap to your final destination (as you have defined it). It is the bird’s eye view of your ultimate goals.
2. What is your tactical plan?
The tactical plan usually involves a much shorter horizon than the strategic plan, because it contains specific, short-term action items. These action steps implement the strategic plan on a day-to-day basis. Measurement and appraisal of progress should be conducted on a consistent basis and adjustments made as necessary. Think of the tactical plan as the physical and mental decisions required to drive a car from one destination to another.
3. What is your execution plan?
Finally, a decision must be made about the driver of your transition team. A strategic advisor who understands your overarching goals is critical to reaching your final destination. The person in charge should also be knowledgeable in the five critical areas that must shine during a due diligence review conducted by a potential seller.
- Contract review/processes
- Finance and reporting
- Corporate structure
- Human capital
- Conflict/risk management
Each of these areas supports a successful business model, regardless of industry. If any of these areas are not running efficiently or effectively, the overall health and viability of the company is affected. And ultimately, the enterprise value for a potential buyer.
In general, many entrepreneurs assume that what made them successful will translate into a lucrative sale of a company, but selling a business is a much different proposition than building it. Isn’t your life’s work worth the effort to transition to the best and highest result, as defined by you?
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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