Years ago, my husband’s brother, Bud, was just a year away from realizing a long-held dream – designing and building his dream home. However, not long after the architect had finalized the drawings, escalating building costs forced him to rethink his decision. Receiving an unsolicited offer to purchase his dream lot for much more than he paid for it, he made the decision to sell and look at other options.
For some it may be difficult to remember but in the mid-2000’s houses were selling quickly, barely staying on the market for even a few days. In town for the holidays, Bud asked us to tour a few homes with him and to this day, one still stands out in my mind.
The realtor warned us, “The owner has a particularly interesting sense of decoration. You’ll have to look past it and realize what a good location and strong bones the house has.”
She was being kind. While the interior paint color (pink) left something to be desired, it was the overall decoration of the home that left us speechless. Apparently the wife was a big game hunter and prolific in her collection. There were more stuffed animals in this home than in any natural history museum I had ever visited. Squirrels on top of the kitchen cabinets, bobcats in the den, elk in the bathroom, zebra rugs and mountain lions in the living room – it was the passengers of Noah’s ark perfectly preserved in life-like poses. Frankly, it was one of the creepiest things I had ever seen. Needless to say, my brother-in-law passed on that home. I don’t think any of us could ever wipe the memory from our minds of what we had seen.
Since that time I have watched enough home improvement shows to know that even in the best seller’s market, the owners of “Taxidermy Town” were really not serious about selling their home or at least not looking for the best return on their investment. While the house was not the classic “fixer upper” – its presentation was so specific, it left little or no opportunity for a new owner to visualize this as their future home.
In speaking with the business owners I work with, I think sometimes those who say they want to sell their business fall into the same trap. While making the decision to sell may be difficult, making your company ready to be bought can be a bigger challenge. And here’s why – deciding to sell your company is focused on you and your future. Preparing your company to be purchased really needs to be focused on the buyer’s needs and wants. Ultimately, there is no sale without a buyer – no matter what reason has prompted you to sell.
In some ways, preparing your company to be sold is similar to selling your home. A new buyer doesn’t care that you have an extra storage space for your antique car in your building, once had a famous celebrity endorse your product or are able to list every customer by name. A new buyer is most interested in how your company can benefit him or fill a need that she has identified for the future. In short, new buyers want to be assured they are making a good investment and will see the anticipated return exceed their investment.
One of the reasons I have appreciated the Value Builder™ System methodology is that it helps improve your company also while using the metrics that a buyer uses to evaluate your business. Based on John Warrillow’s book, Built to Sell, the Value Builder™ System measures and offers opportunities for improvement in the following “Value Drivers”:
- Financial Performance
- Growth Potential
- Switzerland Structure (Supplier, Employee and Customer Independence)
- Valuation Teeter Totter (How your business generates or uses cash)
- Recurring Revenue Streams
- Monopoly Control
- Customer Score
- Hub & Spoke (How dependent your company is on your participation in the business)
Having surveyed over 25,000 companies on these key drivers, the Value Builder™ System is a statistically proven way to increase the value of a company. Having this information can help any owner be more prepared for what is often one of the most challenging times in their careers – selling their life’s work.
Perhaps this has happened to you or someone you know. Deciding that they need to sell their home, they put in the necessary repairs and renovations to make their home more sellable and say, “It’s the nicest it’s ever been – I wished I had a chance to live in it this way!”
The situation is no different in business. Having worked with a number of companies over the past 20 years, I have found that improving these areas not only makes the business more attractive to a buyer, it often makes the company easier to manage and more profitable. Ironically, by preparing a company to sell, it can give owners more enjoyment and wealth before they sell their business.
For my brother-in-law, the story has a happy ending. He found a nearly completed home similar to his original home design where he was able to add his own finishing touches. Just as a potential future acquirer may look at your company and make it their own.
Taxidermy not included.
You can learn more about the Value Builder™ System here. My new book Changing Lanes: The Owner’s Guide to a Successful Exit is now available on Amazon.