Blog

4 Drivers Of A Satisfying Exit – 4 Real-Life Examples

Built To Sell Radio speaks to many different business owners with unique stories. Some share cautionary tales of the mistakes they still dwell on today; others share a great story about what they believe was (and will remain as) the best day of their life.

But beyond the different stories, there is one consistent theme across every single interview: everyone striving for a happy (and lucrative) exit. How they get there is a different story.

Have you considered what a happy exit looks like for you? There are four key drivers to consider that – if left unseen – could leave you with regret.

Future Vision

Most owners get pushed out of their business, but the happiest exits occur when an owner has an equal or greater number of pull factors.

Shaun Oshman is the founder of iSupportU, a Colorado-based IT support company. He decided he wanted to lead a life slightly less ordinary. He was 39 and his company was generating a couple of million dollars of revenue when he decided that by the age of 40, he wanted to be living on a boat sailing around the world.

Oshman’s company garnered an offer of 2-3 times Sellers Discretionary Earnings (SDE). A fair, but far from fantastic multiple for his business. So why is Oshman so happy? Because he had a vision for the future that he was excited about and 2-3 times SDE allowed him to make that dream a reality.

Listen here.

Structuring Flexibility

Structuring Flexibility describes an owner’s willingness to consider multiple exit scenarios. A lot of founders make the mistake of approaching their exit with a rigid vision of how they see their exit.

Stephanie Breedlove built her payroll company by focusing on parents who wanted to pay their nannies. She built her business to $9 million in annual revenue when she started acquisition discussions with Care.com. Breedlove originally wanted an all cash offer but as she kept negotiating, she became more open to the idea of accepting part of her proceeds in shares – she ended up selling her $9 million business for $54 million – part of which was paid in Care.com stock. Had Stephanie clung rigidly to only one option for selling, she may never have received such a lucrative payday.

Listen here.

Personal Detachment

Personal Detachment is the degree to which your ego is dependent on the status of being an owner of your company. Factors here can lead to an owner becoming unwilling or unable to let go.

Steve Murch has had four exits including his first and most spectacular, the sale of VacationSpot.com to Expedia for $87 million. Since then, Murch has gone on to sell four other businesses including most recently, the sale of his recipe app BigOven (which enjoyed 13 million downloads and 4 million subscribers) to the grocery giant, Aisle Ahead Inc.

Far from being a workaholic, as Murch described during our interview, he has built an amazing life for himself away from his businesses: he’s a cyclist, skier, involved father and the head chef in his house (which is how he came up with the idea for BigOven in the first place!).

Listen here.

Team Involvement

Team Involvement is the ability to be proactive about how you want to treat your team as part of the exit process. This is a deeply personal issue for founders, some of whom would prefer not to tell employees for fear of word getting out among competitors.

Bobby Martin found this out the hard way when he sold his company, First Research to D&B for $26 million. The sale was a financial success for Bobby and his co-founder but emotionally it was crushing. He had started First Research with friends and promoted a collegial atmosphere through First Research’s growth. When negotiations with D&B heated up, he felt guilty not to be able to tell his long-standing employees — many of whom were his closest friends. After the sale, Martin went through a bout of depression and he described during our interview and in his bestselling book The Hockey Stick Principles, spent a year in clinical therapy getting over the loss he felt from selling out.

Listen here.

Do you want to improve the value of your business?  Call us today (443) 982-7332.

_______________________________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Thinking About Succession Planning

If you haven’t been thinking about succession planning, the bottom line is that you should be. In the February 20, 2019 Divestopia article, “All Companies Need to Look at Succession Planning,” author Brad Cherniak examines the importance of succession planning. Owning and/or operating a business can be a great deal of work, but it is imperative to take the time to develop a succession plan.

Succession Planning is for Businesses of All Sizes

Author Cherniak wants every business owner to realize that succession planning isn’t just for big businesses. Yet, Cherniak points out that the majority of small-to-medium sized businesses, as well as their senior managers, simply don’t focus much on succession planning at all.

Many business owners see succession planning as essentially being the same as exiting a business. Cherniak is quick to point out that while the two can be linked and may, in fact, overlap, they are by no means the same thing. They should not be treated as such.

Following an Arc Pattern

Importantly, Cherniak notes, “Succession planning should also be linked to your strategic planning.” He feels that both entrepreneurs and businesses managers follow an arc pattern where their “creativity, energy and effectiveness” are all concerned. As circumstances change, entrepreneurs and business managers can become exhausted and even a liability.

The arc can also change due to a company’s changing circumstances. All of these factors point to “coordinating the arcs of business,” which includes “startup, ramp-up, growth, consolidation, renewed growth and maturity,” with whomever is running the business at the time. In this way, succession planning is not one-dimensional. Instead it should be viewed as quite a dynamic process.

Evaluating Each Company Individually

Cherniak highlights the importance of making sure that the team matches the needs of a company as well as its stages of development. Who is running a company and setting its direction? Answering these questions is important. It also is of paramount importance to make sure that the right person is in charge at the optimal time.

Companies and their circumstances can change. This change can often occur without much notice. As Cherniak points out, few small-to-medium sized businesses focus on succession planning, and this is potentially to their detriment.

_________________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

Chaay_Tee/BigStock.com

You Have Built An Amazing Business…Now What?

As a business owner, I know you’re ready for anything. But recent data shows us that even the most affluent and successful founders struggle with one common problem: the regret of how they handled leaving their company. In fact, 75% of owners say they regret their decision to exit after just one year (based on how the process was handled), and only 5% are satisfied with their net proceeds.

I don’t want to see you included in those numbers. By completing a simple, 8-minute questionnaire, we can ensure you have a happy (and lucrative) exit: www.colonialbb.com/prescore.

PREScore™ (or Personal Readiness to Exit Score) is an 8-minute, online questionnaire that evaluates your readiness to exit your company on a personal level. Using an exclusive algorithm – developed by analyzing more than 40,000 business owners – PREScore™ will calculate your readiness to exit by identifying your status on each of the 4 drivers of a satisfying exit.

Simply put, the 12 questions that make up PREScore™ are often overlooked by business owners like yourself, potentially leaving you unprepared and in a state of crisis in your life post-exit. PREScore™ helps you to identify those at-risk areas and ensure you’re ready for a satisfying exit.

.. And don’t be alarmed! You don’t have to be ready to exit in a month, or even a couple of years – this is simply a foundation to help you understand the steps you might need to take in order to achieve a satisfying exit.

I know you’ve put in tremendous effort to get your company where it is today – let’s lay the foundation to prepare you personally for a successful transition into your next chapter while ensuring your business – and your people – will continue to thrive without you.

The next eight minutes could profoundly impact the second half of your life…are you ready?

If you have any questions about this tool, don’t hesitate to contact us. It only takes a few minutes to go through the assessment and all your answers are strictly confidential. Try it out now and find out how to gain more freedom while also increasing the value of your business.

Take your free PREScore™ here: www.colonialbb.com/prescore.

__________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Could the Red-Hot Market for Businesses Be Cooling Down

The economy is red hot, and that fact is translating over to lots of activity in businesses being sold.  However, it is possible that this record-breaking number of sales could cool down in the near future. In a recent article in Inc. entitled, “The Hot Market for Businesses is Likely to Cool, According to This New Survey,” the idea that the market for selling a business is cooling down is explored in depth.  Rather dramatically, the article’s subheader states, “Entrepreneurs who are considering selling their companies say they’re worried about the future of the economy.”

The recent study conducted by Pepperdine University’s Graziadio School of Business as well as the International Business Brokers Association and the M&A Source surveyed 319 business brokers as well as mergers and acquisitions advisers.  And the results were less than rosy.

A whopping 83% of survey participants believed that the strong M&A market will come to end in just two years.  Perhaps more jarring is the fact that almost one-third of participants believe that the market would cool down before the end of 2019.

The participants believe that the economy will begin to slow down, and this change will negatively impact businesses.  As the economy slows down, businesses, in turn, will see a drop in their profits. This, of course, will serve to make them more challenging to sell.

The Inc. article quotes Laura Ward, a managing partner at M&A advisory firm Kingsbridge Capital Partners, “People are thinking about getting out before the next recession,” says Ward.  The Pepperdine survey noted that a full 80% of companies priced in the $1 million to $2 million range are now heading into retirement. In sharp contrast, 42% of companies priced in the $500,000 to $1 million range are heading into retirement.  Clearly, retirement remains a major reason why businesses are being sold.

Is now the time to sell your business?  For many, the answer is a clear “yes.” If the economy as a whole begins to slow down, then it is only logical to conclude that selling a business could become tougher as well.

The experts seem to agree that whether it is in one year or perhaps two, there will be a shift in the number of businesses being sold.  Now may very well be the right time for you to jump into the market and sell. The best way of making this conclusion is to work with a proven and experienced business broker.  Your broker will help you to analyze the various factors involved and make the best decision.

_____________________________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

How to Lose $200 Million

You’ll never know the ideal time to sell your company — but in many cases, it’s when someone’s willing to buy it.

Rand Fishkin, the bestselling author of Lost & Founder, learned this lesson the hard way when his company Moz received a $25 million dollar offer from HubSpot despite only expecting to do around $8 million in sales that year. HubSpot was offering three times forward revenue for Moz and Fishkin thought four times revenue would have been more reasonable. HubSpot’s bid included some cash and a hefty amount of their stock. With strong conviction that his company was worth more, Fishkin declined the offer.

HubSpot shares would go on to grow in value more than tenfold, while Fishkin struggled to manage his company after an $18 million injection of venture capital. Fishkin grappled with depression and ended up stepping down from Moz. During our interview, Fishkin reveals that today, his liquid net worth is around $800,000 – a far cry from the roughly $200 million he stood to gain had he accepted HubSpot’s offer.

What follows is a candid and heart-wrenching tale of ‘the one that got away’ told by Fishkin with humility and grace. You’ll learn:

The best time to sell is when someone’s buying
The early mistake that landed Fishkin in nearly half a million dollars of debt
The one mistake to avoid when approaching venture funding
The math behind venture capital and why it’s almost always a mistake to seek it out

Listen Now

Being ready to sell when someone wants to buy your company requires that you have a business that’s ready to sell. That’s one of the main benefits of going through the 12 steps of The Value Builder System™. Complete Step 1 for free right now by getting your Value Builder Score.

_________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

 

5 Ways To Package Your Service

If you’re a service provider, it can be difficult to separate the service from the provider. Your customers might demand you, which means you can’t scale your business beyond the number of hours you’re willing to work.

In the absence of a point of differentiation, offering generic services leads consumers to evaluate the people doing the work. Referring to your service in a generic way e.g. “graphic design services”, or “lawn care services”, means you’re lumping yourself in with the other providers of the same service.  A quick scan of your LinkedIn profile will reveal that you are likely an expert in your industry which means prospective customers will often demand you, rather than your underlings.

The secret to overcoming this dilemma is to “productize” your service. This involves marketing your service as is if it were a thing. When people start buying the thing, rather than the people providing it, you can grow well beyond the hours in your day.

Proctor & Gamble is the granddaddy of product marketing, so grab a tube of Crest toothpaste and follow their process for productizing your service:

  1. Name it

Crest is the brand name and it is always written in the same font. Having a consistent name avoids the generic, commoditized category label of “toothpaste.” Do you have a catchy name for your service?

  1. Write instructions for use

Crest gives customers instructions for best teeth cleaning results. If you want your service to feel more like a product, include instructions for getting the most out of your service.

  1. Provide a caution

The Crest bottle tells you that the product is “harmful if swallowed.” Provide a caution label or a set of “terms and conditions” to explain things to avoid when using your service.

  1. Barcode it

The barcode includes pricing information. Publishing a price and being consistent will make your service seem more like a product.

  1. Copyright it

P&G includes a very small symbol on its bottle to make it clear the company is protecting its ideas. Do you Trademark the terms you use to describe your service?

Productizing your service is the first step to separating your service from its provider and the key to getting your service company to run without you.

________________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

3 Strategic Reasons Big Companies Buy Small Ones

Ottawa-based phone company Versature was acquired by net2phone in the fall of last year. In this episode of Built to Sell Radio, you’ll hear Versature co-founder Jonathan Moody describe:

• The surprising downside of offering too many things
• The impact your geographic location can have on the value of your company
• How Moody and his partners survived due diligence

Listen Now

One of Versature’s strengths was its recurring revenue. Not only did it give the company a stable income, but even banks recognized it as a key driver of company value when Moody and his partners sought new funding. Module 5 of The Value Builder System™ explores how you can incorporate recurring revenue into your business. Get started for free right now by completing Module 1.

____________________________________________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

What Kind of Buyers are You Most Likely to Meet?

Selling a business can be an exciting and rather lucrative time.  But going through the sales process means embracing the notion that you’ll have to be very prepared for whatever might be thrown your way.  A key aspect of preparing to sell your business is to know what types of buyers you’re likely to encounter.

It is only logical to anticipate the types of buyers you may be dealing with in advance.  That will allow you to plan how you might potentially work with them.  Remember that each buyer comes with his or her own unique desires and objectives.

The Business Competitor

Competitors buy each other all the time.  Frequently, when a business is looking to sell, the owner or owners quickly turn to their competitors.  Turning to one’s competitors when it comes time to sell makes a good deal of sense; after all, they are in the same business, understand the industry and are more likely to understand the value of what you are offering.  With these prospective buyers, a great confidentiality agreement is, of course, a must.

Selling to Family Members

It is not at all uncommon for businesses to be sold to family members.  These buyers are often very familiar with the business, the industry as a whole and understand what is involved in owning and operating the business in question.

Often, family members are prepared and groomed years in advance to take over the operation of a business.  These are all pluses.  But there are some potential pitfalls as well, such as family members not having enough cash to buy or not being fully prepared to run the business.

Foreign Buyers

Quite often, foreign buyers have the funds needed to buy an existing business.  However, foreign buyers may face a range of difficulties including overcoming a language barrier and licensing issues.

Individual Buyers

Dealing with an individual buyer has many benefits.  These buyers tend to be a little older, ranging in age from 40 to 60.  For these buyers, owning a business is often a dream come true, and they frequently bring with them real-world corporate experience.  Dealing with a single buyer can also help expedite the process as you will have fewer individuals to negotiate with.

Financial Buyers

Financial buyers are often the most complicated buyers to deal with, as they can come with a long list of demands.  That stated, you should not dismiss financial buyers.  But just remember that they want to buy your business strictly for financial reasons.  That means they are not looking for a job or fulfilling a lifelong dream.  For financial buyers, the key point is that your business is generating adequate revenue.

Synergistic Buyers

A synergistic buyer can be an excellent candidate.  The reason that synergistic buyers can be such a good fit is that their business in some way complements yours.  In other words, there is a synergy between the businesses.  The main idea here is that by combining the two businesses they will reap a range of benefits, such as access to a new and very much aligned customer base.

Different types of buyers bring different types of issues to the table.  The good news is that business brokers know what different types of buyers are likely to expect out of a deal.

Copyright: Business Brokerage Press, Inc.

12587279/BigStock.com

What Kind of Buyers are You Most Likely to Meet?

Selling a business can be an exciting and rather lucrative time. But going through the sales process means embracing the notion that you’ll have to be very prepared for whatever might be thrown your way. A key aspect of preparing to sell your business is to know what types of buyers you’re likely to encounter.

It is only logical to anticipate the types of buyers you may be dealing with in advance. That will allow you to plan how you might potentially work with them. Remember that each buyer comes with his or her own unique desires and objectives.

The Business Competitor

Competitors buy each other all the time. Frequently, when a business is looking to sell, the owner or owners quickly turn to their competitors. Turning to one’s competitors when it comes time to sell makes a good deal of sense; after all, they are in the same business, understand the industry and are more likely to understand the value of what you are offering. With these prospective buyers, a great confidentiality agreement is, of course, a must.

Selling to Family Members

It is not at all uncommon for businesses to be sold to family members. These buyers are often very familiar with the business, the industry as a whole and understand what is involved in owning and operating the business in question.

Often, family members are prepared and groomed years in advance to take over the operation of a business. These are all pluses. But there are some potential pitfalls as well, such as family members not having enough cash to buy or not being fully prepared to run the business.

Foreign Buyers

Quite often, foreign buyers have the funds needed to buy an existing business. However, foreign buyers may face a range of difficulties including overcoming a language barrier and licensing issues.

Individual Buyers

Dealing with an individual buyer has many benefits. These buyers tend to be a little older, ranging in age from 40 to 60. For these buyers, owning a business is often a dream come true, and they frequently bring with them real-world corporate experience. Dealing with a single buyer can also help expedite the process as you will have fewer individuals to negotiate with.

Financial Buyers

Financial buyers are often the most complicated buyers to deal with, as they can come with a long list of demands. That stated you should not dismiss financial buyers. But just remember that they want to buy your business strictly for financial reasons. That means they are not looking for a job or fulfilling a lifelong dream. For financial buyers, the key point is that your business is generating adequate revenue.

Synergistic Buyers

A synergistic buyer can be an excellent candidate. The reason that synergistic buyers can be such a good fit is that their business in some way complements yours. In other words, there is a synergy between the businesses. The main idea here is that by combining the two businesses they will reap a range of benefits, such as access to a new and very much aligned customer base.

Different types of buyers bring different types of issues to the table. The good news is that business brokers know what different types of buyers are likely to expect out of a deal.

______________________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

12587279/BigStock.com

Two Exiting Tips From One Of The Top 40 Under 40

Wind Mobile founder Anthony Lacavera has started 12 businesses, six of which he has exited. His exits have ranged in value from the $6 million he got for one of his recent start-ups to $1.3 billion when he sold Wind Mobile. He did it by following two key tips.

  1. Understand what kind of company you are running

Lacavera has owned hyper-growth unicorns and lifestyle businesses and urges entrepreneurs to be clear about their long-term prospects. Lacavera started a business supplying hotels with internet access and understood the company would be a good cash generator, but would never sell for a mint. He ran the business for almost two decades and used the cash it generated to fund various other ventures. Recently, he finally sold the business, which was generating $1.5 million in pre-tax profit, for $8 million—a relatively modest 5 times earnings, which was fine by Lacavera, because it had served its purpose of funding other companies along the way.

  1. The role of CEO and owner are not the same

Lacavera encourages entrepreneurs to separate the role of CEO and business owner. Even though they may be the same person, they have different functions and, at some point, your business may be better served by separating the two roles. Entrepreneurs who are comfortable handing the reins to a professional manager may do better in the long run than those who need to control everything.

Lacavera had great success, which is visible in the fact that he has won just about every business award there is, including 2010 CEO of the Year, Top 40 Under 40, Deloitte Technology Fast 50, and Canada’s Fastest Growing Company. One of the top secrets to Lacavera’s success — knowing when to bring in a CEO to replace himself in any of his ventures.

_________________________________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.