When you’re in charge of a business, you’ll be used to managing staff and helping them perform at their best. But when you’re the one in charge, who’s there to tell you how you’re doing? And when you’re thinking of selling your business, who can you talk to about it?
It’s this situation that struck Sandy McNeur during his work as a general troubleshooter in the rag trade and a business mentor for Auckland Chamber of Commerce. He noticed several clients looking for exit strategies for their businesses – and not knowing where to turn for advice. Spotting an opportunity, a business idea was born.
Sandy’s research soon showed that there were thousands of SMEs in New Zealand where the owners were in their 50s and 60s, with no plan of how or when they could sell or retire. Sandy’s business, Climb Business, now concentrates on exit planning along with business mentoring and coaching, business turnaround and expansion and stock clearance.
“Running your own business is one of the most rewarding and challenging things you’ll ever do,” Sandy says, “and often when you’re in charge, there’s no one to tell you how you’re performing.
“It’s typical that you've been in business for a while. You've probably been very successful and now you're looking to take the next step and retire, or sell and move on to a new venture.
“But it can come as a surprise to business owners that even at the best of times, the sale of a business may take years and seldom comes easy.”
Most businesses need to be 'tidied up' in order to achieve the best sell price, or even to be saleable at all. And some need the benefit of new thinking and new strategies to get to a point where they will meet the owner’s sales expectations.
Sandy highlights some common problems that can slow you down:
Lack of sales or margin
Whether you are a retailer, wholesaler or an IT specialist, your business is based on your level of sales. Often when sales drop, so does the value of your company. Likewise with margin – it is very important to never “give away” your product, which is what you are doing if you do not have correct costings. Incorrect costings or no contribution are also going to put extra pressure on your bottom line.
High stock levels
Stock control is so very important, but it is also crucial that you do not hold on to old stock of little or no value just to keep your bank happy. It is much better to “bite the bullet” and turn old stock into cash, whatever the value is. This will let you invest in stock that can move easily, and therefore make a contribution to your bottom line.
Staff and management issues
It is very important, especially if you are looking at selling, that your company can work well without you. Check that your staff are a good blend, that you have competent managers and more importantly, that all employment contracts are in place. Your company becomes even more valuable if it can hum along well without you.
Property or lease issues
Even if you not going to sell for several years, if you are renting premises, make sure all your leases are in place and for a reasonable length of time. Your landlord may also want you to guarantee the lease for the new owners – however, it is best to avoid this situation if possible. If you own the building, the rent will be a good income after you sell the business.
Good systems in place will make your business easier to sell. Check that you have the best software that you can afford, as stock control and accounting systems will add to your company’s value.
Get a mentor
A good mentor is worth their weight in gold, and will often spot areas where you can improve the bottom line, and therefore the value of your company.
For more information on your exit strategy, and a free chat, contact Sandy McNeur via: www.climbbusiness.co.nz
December 17, 2015