The Downside of DIY Business Deals
/We are in an unprecedented era of specialization. These days there are people to help in our businesses with hiring, cleaning or doing the books. You can find someone to do almost anything to get your product out the door. In George Clooney’s 2009 movie Up in the Air, Clooney played the part of a man who travelled across the country just to fire employees. Remember when you used to do everything yourself? As your business matures, you will find yourself doing a cost/benefit analysis of every hour of your time. Consciously or not, you ask yourself, “If I do this, what am I not able to do?” or “What would it cost me to pay someone else to do this?” We make a quick evaluation of the value of our time vs. the task at hand and decide whether or not we are the best person for the job – for the skills and the cost.
When business owners decide to sell their business, they often try it on their own. “How hard can it be?” Even for those who have done it before, selling a business is a unique situation each time and the hurdles to completing the deal are different each time. Here are a few things to consider.
· How much do you want for your child?
Luckily, this is not a common question in Canada. We don’t have to put a value to our children to survive. On the other hand, when someone makes an offer on something you’ve created from nothing, nurtured and sweated over how much would you want? It’s often hard for business owners to be objective about something they’ve invested so much into. “When we do a business valuation for clients, they’re always surprised. Either the value is much lower or higher than they expect,” says Travis Kellett of Bridgepoint Business Brokers. “Very rarely is an owner in a position to put a realistic value on their business which means they’ll accept a lower price than they should or they can’t sell because they’re asking too much.”
· You can’t see the outside from inside the box.
Perspective is everything – especially in a business sale. Seeing the same people, processes and results year after year creates blind spots for the owner. “Looking at the business from a buyers’ point of view is very difficult for most entrepreneurs but it’s what we do every day,” says Kellett. “One of our clients was telling potential buyers about the profitability of their business but no one was making an offer. When we dug into things, we found that there was no supporting information to justify the client’s asking price. It took a few months of cleaning things up and creating a concise information package for buyers to accurately assess the opportunity. The business was easy to sell after that.”
· Do it once – do it right!
Unless you’re Michael Jordan or Mario Lemieux, you’re only going to retire once. As part of the plan to make that happen, you’ve probably asked for some help or advice to be sure that there is a pot of gold at the end of your rainbow. If you’re only going to sell your business once, don’t you want to get the best deal you can? Bridgepoint Business Brokers has been in business for 7 years in the Saskatoon market. We’ve seen different business deals and experienced almost every complication that can happen (there’s always a new twist so we haven’t seen it all!). The same way that you know your market and your customers, so do we. We offer market and transaction experience in addition to the resources to handle all of the details of the sale. You’re only going to do this once, so give yourself peace of mind that experienced professionals are doing the heavy lifting.
