Learn powerful lessons through the story of how sbLiftOff helped the owner of a highly profitable business finally transition from making all the day-to-day decisions to running a self-sustaining organization ready to sell.
I was in a meeting with a business owner, who owned a food services company. The company prepared meals and delivered them around the country.
While sitting at a table with my client, during our 90-minute conversation several of his employees called with questions like, “The sink is stopped up. Who should we call?” “Mary didn’t show up at work today. What should we do?” “The invoice is missing. Where do we look?”
I knew that the company had been operating at a profit for years but was aghast to realize that the employees had no idea how to run the company without the owner’s input and direction. This owner didn’t have a company. He had a job with staff.
Ask Yourself This Question
As the owner of your company, you must ask yourself a very important question: “Am I running my business 24/7, or do I have people within my company who can maintain company operations if I weren’t there?”
Your answer to this question will determine whether you have a company that’s sellable. The counterintuitive aspect is that the more important the owner is to the company, the less sellable (and certainly less valuable) the company.
Potential buyers want to know that your company will continue its operations without you being there. Even if you are staying with the company after a sale, the buyer will assume that the seller will be less motivated to work as hard as when they owned the company. Knowing there is strong management separate from the ownership gives the buyer assurance as to the ongoing feasibility of the company.
Make Sure The Engine Will Keep Running
Another response to the question, “Is my company sellable?” is to ask another question: “Is the machine itself useful, and if so to whom?”
A company is a machine that takes in revenue and throws out profit. And if a company is a machine, then management is the engine. The engine is what drives the machine, so the machine is only as strong as the engine.
A buyer will want to know if the current management will continue “driving the business” by providing the same level of expertise and proficiency after the sale as before. The buyer wants to know that your company will continue to provide its goods and services to clients with the same quality and be able to attract new business.
Don’t Play Gatekeeper
I worked with a manufacturing firm in the aerospace industry. The owner had set up the company so that it would continue manufacturing parts if he wasn’t there.
Excellent!
However, the owner was the only person in touch with the clients, and he jealously guarded those relationships. In fact, he was the single point of contact for all customers.
Upon realizing this, I looked him straight in the eye and said, “The company may run without you, but where is future business going to come from, if you aren’t there?”
We had further discussions about this, and over the next year, he started introducing other people in their organization to all clients, giving the clients more points of contact within the company.
When a problem came up and an employee brought it to the owner, he said, “Call the client yourself and resolve the issue. I’m here to help if you need it, but you can do it.”
By the end of the second year, customer/employee relationship connections were imbedded throughout the company.
The company was now sellable.
Foster Self-Sufficiency
When you’re ready to sell your company, you want to be sure the company is truly ready to sell. And the only way to ensure this is to deliver a self-sufficient company that can continue to thrive without you.
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