When is the Best Time to Sell Your Business

When to sell a business is the most common question among business owners. The time to sell is when you want to move on to the next challenge or retire. If you don’t move on when your heart is no longer into it, you may do harm to your business. Don’t worry about if you’re selling when the market is at the top because no one really knows where that is; or how far it may go down. Efficient markets price everything from gasoline to cheese fairly and your business is no different. This is true as long as there is a liquid market for your business; meaning there are enough buyers and sellers to create an efficient market. People worry about not getting enough money for their business instead of worrying about their buying power. In a buyer’s market, buyers demand a discount so you may get less for your business, but you also get more buying power from the sale of your business. In a seller’s market, you may collect more money at closing, but you will have less buying power as goods and services are priced at a premium. As long as you create an efficient market for your business, the time to sell is whenever you are ready.

A strong business is worth more money than a weak business. Every business owner should always be strengthening their business to enhance its value. Don’t worry if your business isn’t perfect, none are and the imperfections in your business may be just the thing that gets it sold. People like to buy businesses with the right things wrong. If a manufacturing company had a great line of products but poor marketing, a marketing person could buy the company and maintain existing product line and add strong marketing. The business would be more valuable for the new owner after marketing was added.

Your business must be presented in a way to create an efficient market so you get maximum fair market value upon sale of the business. This process must be done without anyone knowing your business is for sale until you leave the closing table. Failure to do this could result in the loss of key employees, customers and vendors.

Business brokers or business intermediaries are commonly used to connect buyers and sellers. Business broker typically collect a fee of 10-12% of the sales price, but some will negotiate depending on the circumstance. It is possible to sell a business on your own, but you must carefully plan how you will present the business to the largest amount of buyers while maintaining complete anonymity so no one knows it’s for sale.

If you are considering selling your business, the probable sales price of your business will be important. All businesses are valued based on their capacity to earn income and how reliable the income stream. Businesses are sold on some multiple of earnings. The multiple is dependent on the quality of earnings. The corner sandwich shop may get 1 times earnings while Google gets 30 times earnings. The market is pricing Google’s earnings 30 times more than the sandwich shop because the sandwich shop could go out of business for many reasons, but it is unlikely that Google will go out of business or stop making money in the foreseeable future. As the earnings prospects change, so will the multiple.. It’s critical that business owners constantly increase the value of their business, regardless if you ever decide to sell.

Entrepreneurs Vs Business Owners

The role of the owner is to provide the skills or purpose to employees and infuse a results-driven culture into the business.

A businessperson who is an entrepreneur can generate purposeful action within their business whether or not they are physically present. Entrepreneurs focus on the business. They can, with a couple of phone calls, generate income. They lead, inspire, and generate purpose amongst staff. They do not need to work in their business, but may choose to do so.

Ultimate café owners are entrepreneurs. They understand:

Who is responsible for every result within their business – they are.
That their business is all about them – physically, mentally and spiritually – but does not mean they have to be in it 24/7.
That business is energy – vibrations must be positive and strong.
The difference between effective actions and efficient actions.
The power of leverage (Pareto’s law).
That there is no such thing as competition (certainly not at the top 1%) – they create their own outcomes.

Ultimate café owners I have worked with have certain common traits. They:

* are willing to listen in the first place, and accept instruction.
* possess an enquiring mind
* are always prepared to take on more
* work on becoming or being positive
* are not aggressive, but solidly confident when going about their business – unassuming and humble would be another description

What’s more, despite the overwhelming numbers of coffee shops and cafés, there are very few of them around – only 1%. This is great news for you, since it will be rare indeed that you will set up your business next to one. You have a 99% chance of locating yourself next to the ‘average’ performers who are no competition at all. Capturing the market from them is as easy as a turkey shoot.

The traditional picture most people have of an Ultimate businessperson is the Lt. Colonel George Custer model – the type who brandishes his sword and wildly throws himself into the fray! Someone who is aggressive and loud, who sounds like they know what they are talking about, and who generally likes the sound of their own voice.

This picture could not be further from the truth. Ultimate café owners always strategise and plan before taking action. And when they do act, it is in an organised and timely manner. They command respect because they are the business – they know it intrinsically – and this consummate confidence is obvious to staff and customers alike.

Of the remaining 99% of business owners – the ‘average’ business owners, there are two main types. They are:

1. The business owner who needs to be in their business simply because nothing will happen if they are not. Some characteristics which identify them are the following:

Things will fall apart if they step out. While they may be deluded into thinking that they are a businessperson, in reality they are simply another, albeit more glorified, worker in the business. My exposure to businesses across the globe has taught me that the majority of owners feel and act this way.

They fight hard every day just to keep up with the myriad of tasks thrown at them from morning to night, always fighting rear guard actions, rarely feeling like they are on top of things. They feel as if they merely hold down a job, and a pathetic one at that.

They are the first ‘worker’ in and the last ‘worker’ out. They are very quick to blame everyone (mostly staff) and everything (mostly other competitors and the state of the economy) for their mediocre results.

And because they feel and behave this way (precious little positive energy), so do their workers. You can feel it immediately as you step into their business. No wonder that most employees do just enough to get by. In fact, it’s all they can manage under the circumstances.

They get used to only ever achieving ‘average’ results, and come to believe it is all they can expect.

2. The owner who abrogates their responsibilities all together, and expects their business to operate by remote control. This type of owner is possibly the most toxic to a business. These are some of their characteristics:

The majority are happy to spend hundreds of thousands of dollars on a reasonably successful business, expecting the status quo to continue without direction or input. To me, they have ‘more money than sense’.

They put managers in place – dramatically increasing the operational expenses of their business without setting in place a sales growth strategy to counter this.
They fail to make decisions in a timely manner, and when ultimately forced to, expect immediate positive results – because so much of their money is ‘on the line’. In many cases, when their expectations are not met, they explode into tantrums which two-year-olds would be proud of.

Sure enough, within a short space of time, sales slump. Their business becomes a mere empty shell and they degenerate into a state of despondency and pessimism. They claim they tried everything but nothing worked!

For these businesses, moving beyond customer expectations is just not possible. Becoming an Ultimate business requires being on top of every little detail. It is about creating a proactive culture which can only happen if you are free of the daily minutiae of business.

If you happen to be sick of not being able to leave your business (even for a day!) and constantly worry about something going wrong, or you are simply sick of feeling like your business is not getting ahead, all is not lost. It is never too late to take the focused and purposeful action needed to transform your business!

Wanting mastery over your business will eventually see you redundant in your business. Over time you free up more time to work on your business. And practice makes perfect – the more time you spend working on your business, the more time you end up having.

Consider the following analogy. Before you can captain a team, you must first become the best player, not just physically, but tactically. Only when you lead your team to a number of victories can you contemplate ‘retiring’ as captain and becoming a coach. The coach of a team is not required to run onto the sporting field, but they are responsible for the training and on field results of the team. Everyone seems to know this about sport. I am encouraging you to think this way about business.

Your job is to become the ‘coach’. And only when you work on your business, not in your business, will you have achieved this. That said, there is no shortcut to getting there. It is the price you have to pay if your aim is to become an Ultimate, rather than an ‘average’, business owner.

George Sabados is the worlds leading motivational speaker to major coffee retail and franchise chains around the world. He can inspire and, most importantly, instruct coffee focused businesses in how to generate explosive sales growth and profitability in the shortest time possible – his 3 levels of mastery guarantee massive change in 12 weeks! First and foremost, George is a retailer and knows how to focus a business on being a stand out to customers, resulting in instant local market leadership.

The Meaning of Business

What is business about?

If you are in business, whatever the type, it would serve you well to understand the reson d’être, or reason, a business exists. Anyone who ever participated in an economics class back at school would have learned this ‘basic principle’ of business. I admit, from experience many business owners have forgotten it, and surprisingly, even more business owners are not aware of it.

Business is all about selling a product or service in order to make a profit.

This is powerful stuff if you can make it your guiding principle behind everything that you do – but as I said, I have been surprised during my consultancy work that many business owners are completely unaware of it.

But I go one step further in assisting business owners lay down the foundation stone of their business. I have added some extra words (critical points) and a fourth element to motivate clients to continue achieving great results with their businesses. So here are my reasons why a business should exist:

A business (1) specialises in selling (2) specific products or services with a distinct point of difference in the market, (3) to make a profit (4) sustainably and continuously.

I have highlighted the critical words (which I have added) to the age-old economic phrase. My thinking behind customising the reason for a business’ existence lies in my belief that it is simply not good enough for a business to offer the same goods and services as the bulk of other like minded businesses, and nor is it good enough to experience industry benchmark returns/percentages of profit. Furthermore, the actions of every member within every business must be tuned for the long-term (sustainable and continuous) growth in profit.

This means that a static profit percentage following a predictable bell curve, leading to a flattening of growth, then decline, does not have to be law so long as the business focus is on integrating ‘different’ methodology, structure, and philosophies guaranteed to deliver solid sales growth. These approaches shun the ‘normal’, and widely accepted, asphyxiating year on year practice of draconian fiscal restraint and/or cutbacks. (Incidentally, it is my firm opinion, proven by 100′s of success stories, that the carte-blanche razoring of inputs and operational expenses of businesses actually diminishes sales over periods greater than 12 months). In other words, the actions of most business owners actually damage their business because they do not appreciate fully the implications of my description of why a business exists.

So, let’s look at these 4 elements and critical words in sequence.

1. ‘Specialises in selling’: – many businesses involved in other industries such as real estate, new and used vehicle sale, telecommunications etc, readily accept the absolute necessity of ongoing and innovative training in sales. It accepted without second thought or complaint. All businesses are in the business of selling, and that is a fact!

However, when it comes to Food & Beverage sector businesses, most business owners believe they don’t have to focus on training staff to sell. The highly organised multi-nationals are not included in this group, but without any doubt in my mind, it defies belief as to how many staff members of F&B businesses HAVE NOT been trained in sales methods, techniques of up-selling, on-selling, cross promotions, local area marketing etc.

If your first ‘link in this chain’ – which is to become a specialist sales focused business – is made strong, with an unassailable level in your local market, then it must follow that the last ‘link in this chain’ will improve dramatically.

2. ‘Specific products or services with a distinct point of difference in the market’: – it is simply not enough, in the 21st century, to offer products or services to the same level of quality (or value) to the bulk of other like-businesses out there. In my mind, it is inexcusable. We live in a day and age where everyone is seeking a better look, a better experience, a more up-market vehicle etc. Times have changed from the days where any old car would do! If it were not so, then their would be little interest in the great many lifestyle programmes on television – they seem to engulf most of our viewing time – which exalt the sophistication and value of quality.

Quality, when it comes to the Food & Beverage sector, is a point of difference! The reality is that the bulk of businesses continually scour for suppliers who can supply the lowest possible cost of goods. Whilst I am not advocating going berserk with spending on quality raw materials, there is a weighted balance towards better quality supplies that I do advocate. For instance, if you buy a basic computer, you get what you pay for. Spend a little more, and the number of features you can add to the ‘base’ model rises exponentially. Of course, there is a point you reach where for every dollar spent thereafter brings minimal (noticeable) improvements to the user. Like computers, food and beverages fall into the same pattern. I admit, that having worked in Asia, that making many business owners understand this is largely predicated on their ability to quantify or discern a significant difference in quality of somewhat more expensive inputs – e.g. Coffee. The reality is that the Asian palate, and the typical Asian consumer is not, on average, a sophisticated coffee drinker. Much the same could be said for wine – both liquids being well and truly entrenched in western culture for many years. What is significant is that in western cultures the pursuit of quality over price has come at a time of maturation of these markets, and the adjustment of palates able to taste quality differences.

In an immature and improving market, a shrewd business owner can take the ‘jump’ on all their competitors by borrowing this mature market approach, and deliver an overwhelming point of difference in all products/services delivered to end consumers. It may ‘cost’ a little more (and I prefer to call it an ‘investment) but it delivers primacy of place in your market and a huge uplift in sales since customers instantly acknowledge a vast improvement in value for money.

3. ‘To make a profit’: – no need to labour this point. I think we all know that we need to make a profit otherwise we will soon be out of business. Whilst this is a fundamental understanding, it is not so easily achieved when I emphasise it should always accompany the following element.

4. ‘Sustainably and continuously’: – making a reasonable profit is okay, but if it is a benchmark result (i.e. in keeping with industry averages) then how is it that you or your business is any good? There is no way anyone can convince me that they are a great businessperson, or that their business is performing very well, when the little percentage figure at the very bottom of their P&L speaks for itself. It is true that everyone is different, and that a great many business owners would be very happy achieving industry benchmark results. Maybe so, until I can point out exactly how much they miss out on every year, and what that translates to in percentage profit within one year. And what that would mean over the remaining time on their lease. And what it would mean in increased capital value of their business. It has not been uncommon for businesses I have worked with to experience 40% or more in sales growth per annum (irrespective of external dynamics) and over several years.

Sustained and continuous growth means sustained and continuously growing profits – for it cannot be any other way unless you grossly mismanage or misappropriate your cash-flow. But to achieve it, a business must not only make claims of being ‘the best’ or ‘market leader’ it must live it. Few do. In my mind, any claim of leadership must be founded on a track record of (1) real innovation and (2) complete local market dominance. As I said, few business owners can lay claim to these. But being able to results in proof that sales and profit growth can be sustainable and continuous over the long term.

Whilst it is easy for me to lay out the above comments, we must take a serious look at whether we truly are squeezing out every bit of $$$ juice from our business. Remember, if we are focused and intentional about the above elements our business will be well on its way to doing so. Surprisingly, it is easier to tell when a business is not.

The telltale signs are easy to recognise, and surprisingly you will notice them in most F&B category businesses. Just imagine yourself as a customer, and let me ask whether you ever noticed:

Staff who avoid your gaze when you enter the store?
Staff who are too busy wiping counters and expecting another staff member to serve you?
Staff who stand behind the counter numbly waiting for the customer to tell them what they want?
Staff who do not suggest add-ons or up-sell to customers?
Store owners who, by their very demeanour, are signalling they do not wish to be bothered by you?
Stores and display cabinets devoid of product? (How can you hope to sell with empty display cabinets?)

And there are many more examples, but I think you get the point. A question, which is more pertinent to any business owner reading this, is: – how much of this is going on in your business?

At a minimum, you and your staff must become experts at selling.

I often pose the following question to owners:

How different would your turnover be if everyone in your business had attended at least one selling techniques course, or participated in an in-house sales role-playing session?

Sales improve when everyone working in the business understands that ‘we don’t save our way to success; we sell our way to success’. So, at a minimum, anyone involved in a business must understand and master how to sell techniques.