Want to live off your business, not for it?

office-620817_1280_smallOften, small business owners come to us saying “I’m over it, I want to sell up”. But the first thing they want to know of course is how much they can get for the business – and whether it will be enough to allow them to live the life they want.

The value of the business depends on how much the business can ‘run itself’, so here are some questions to ask yourself:

  1. Does your business suffer when you’re not there?
  2. Do you have one major customer that you rely on, or who can dictate terms?
  3. Do new clients sign up because of you personally?
  4. Do you have to do every job yourself or directly instruct others what to do?
  5. Are holidays rare and anxiety-provoking events?
  6. Are you working every minute you can find, even outside office hours?
  7. Do you have to personally solve every problem that comes up?
  8. Do your customers usually have your personal mobile number?

The good news is that there are plenty of practical and proven measures that can help. Formalising decision rights is just one example of a solution that has helped our clients. Here are some tips on formalising decision rights in your business:

  • Put it in writing.
  • Keep it simple – make it easy for staff to look up by role or by decision.
  • Ensure that financial limits (ie. anything to do with spending money) are linked back to the company budget.
  • When setting limits, weigh up the risk to the business versus the efficiency you gain from staff having autonomy.
  • Consider the need for teamwork on certain decisions e.g. you may want the Financial Controller to involve the Operations and IT managers in a software purchase decision.
  • Cover non-financial decisions as well e.g. ‘Issuing a Media Release’ which could cost the business dearly in terms of reputation or litigation if it goes wrong!

If you’d like to know how much you might get for your business if you sold up today, a Sellability Score assessment allows you to see your business as a buyer would see it, and to identify how you perform on each of the eight key drivers of sellability. The questionnaire takes about 13 minutes to complete, and after you’re finished you’ll get a customized 27-page report outlining how you performed and where you could improve the value and sellability of your company. Get your score now!

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