Most of the owners I work with started a business so that they could work for themselves in their chosen profession. Essentially, they were creating themselves a job – expecting to have more freedom, control, and income than working for someone else. Let’s face it, it’s great to own a business where you get to do the work you love! It’s what we call a lifestyle business. A lifestyle business generates good income for the owner but that doesn't necessarily mean it has transferable value to a potential buyer. When it works, it’s awesome. But...
What seems like an exciting challenge and adventure in the earlier days of practice ownership – long hours, increasing revenue, growing a business – can start to wear on you over time.
It might not be so noticeable when you’re younger and full of enthusiasm, but the stress and pressure take their toll over time. At some point, you may end up feeling frustrated or burned out. It’s not fun to look at your accomplishments and what you built and realize that although you’re successful on the surface, what you’ve actually created is something I call Owner Overload. You feel stuck and trapped in your business, unable to take a (real) break and feeling a bit resentful and disillusioned that while you’re making good money, you are unable to enjoy it. It’s at this point that many owners start to think about escaping. Sometimes quite literally – fantasizing about throwing their keys on the front desk and walking away. (Or was that just me?) But mostly, they think about SELLING their business. It’s an appealing option. You get to walk away and be free. AND you get a big payout in return for your hard work.
There are 2 BIG problems with this plan. One that you probably already know about. And another that you might NOT know about.
First, let’s look at the one you’re probably already aware of. You’re not ready to do this yet. (If you were, you’d be gone already!) You don’t have enough personal money socked away to fund your retirement and you have no idea what else you would do for work to make up the difference. So, you think you need to suck it up and put in another 5, 10, 20 years of relentless work before you can pull the pin. Meanwhile, at the back of your mind, you plan to one day sell the business and realize the number you told your financial planner your business was worth. This is where the bigger problem lies – the one that many business owners aren’t aware of.
You may not be able to sell your business for what you believe it to be worth. You may not be able to sell it at all.
If you, the owner, are at the center of the business – your business isn’t worth anything aside from what your physical assets could be sold for. You may be pulling good money out of it, but the business is only valuable when you’re making it go. Without you, the business ceases to exist. This makes your business unsaleable – and that number on your financial plan unattainable. You might not know this, but 80% of businesses listed for sale don’t sell. So many times, I have been approached by owners who were eager to sell - and there were buyers eager to buy - but we couldn't reach a deal because the owner had not made their business ready to sell and attractive to buyers. I had to tell those owners that those hungry buyers weren’t interested. No one wants to buy their way into Owner Overload.
People in the market to buy a business want to buy a GOOD business.
A GOOD business is a valuable business. It:
- Makes lots of money. It’s consistently profitable.
- Has the potential to grow.
- Runs well without the owner’s direct involvement.
- Has a steady clientele of happy, repeat customers or clients.
- Has documented processes and systems in place.
Here’s something interesting: a good business to BUY is also a good business to RUN. This is why you need to include Exit Planning in your business strategy.
When you build a business with the plan to sell it one day, you end up building a business that is a joy to run as well.
And this is GREAT news for anyone feeling stuck in Owner Overload. You’ve already checked some of the things off the list of what makes a valuable business. The sticking points for most owners are items 3 and 5: having a business that runs well without the owner’s involvement and having documented systems in place. These are fixable. And if you choose to do the work to fix these now, not only will your business be valuable and saleable when you’re ready to leave – it will also free you from Owner Overload NOW. It’s a no-brainer. You can carry on as you are and have nothing to show for it in the end. Or you can free yourself and create a business you love, then cash out when you’re ready. If you’d like to go through door #2 I can help. Book a strategy call here: Book a call with Dawn.
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