Let me repeat some statistics: 75% of all small to medium sized businesses never sell. 17% sell for a disappointing sum. Only 8% sell for a sum that meets the owners hopes and desires. That is 1 in 12. So if your business is likely to be in the 75%, what can you do to get value? Some businesses are not suitable for sale. Typically, we are talking about businesses in the following categories: Owner is totally critical to the business – examples can be found in most small professional practices where the client acquisition and service delivery is solely the responsibility of the owner Sole trader with distinctive skills, such as a trades professional e.g. a plumber or an electrician who are incapable of managing other people, or who prefer not to manage other people, and are satisfied to make a living on their own, having built up a wide referral base of satisfied customers Businesses dependent on one large customer such as a specialist … [Read more...]
Achieve a good price when you sell your business
Its a sad fact that only 8% of small businesses are sold for a decent price. This is not good news if you are relying on selling your business for your pension, or indeed for any other purpose. However, many more businesses would be saleable for fair value if the owners had planned their exit in good time. Exit strategy Will you transfer your business within your family, or do you want to sell it - to an employee, or to an outside purchaser? How much do you want for it? When? Will you stay with it or move on? You'll need to think this through because your exit strategy will determine how you go about positioning your business for its eventual sale. Positioning your business for sale You’ll start with a valuation and you’ll almost certainly find it is well below what you need. So, then you’ll need an analysis of your business to show you what has to be done to achieve your price. This may include: getting your accounts in shape and audited; some growth, not the least to show … [Read more...]
Business Baby Boomers Benefit from Exit Strategy
After the second world war, there was a surge in the population which is now more commonly known as the baby boomer generation. Sixty or so years on these baby boomers have started to retire. In fact in the UK in 2006 there were more pensioners than children and by 2029 there will be some 5M more baby boomer pensioners. There are about 4M businesses in the UK and of these about 3.2 million are one person businesses with a further one million having up to 249 employees. It is estimated that, as the baby boomer owners start to retire, 30% of these businesses will transfer ownership during the next 10 years. That is 1.5 million businesses! And with fewer younger entrepreneurs coming through many of these businesses will not be sold but simply shut down. According to the Office of National Statistics 67% of us either have no idea or only know vaguely how much our pensions will be. And many of us do not think we can live on whatever pension provision we have made. The sad fact is that … [Read more...]
