WeWork declared bankruptcy due to an overly ambitious business plan and model. As a small business owner aiming to build wealth, don’t be like WeWork.
Want to exit with style, grace, and more money™? Steer clear of the following “don’ts:”
Don’t play hide and seek with your financials –
- Be prepared to share, it’s open kimono time. You will be asked more questions about the business than you ever thought and just when you think there can’t be any more, the bank or investors will ask more.
Don’t play tricks with your numbers –
- Get your financial reports in order. The financials should not be subject to interpretation. Make it easy for a buyer to believe you. If they don’t, the deal won’t get done or won’t get done on the original terms.
Don’t spend big on a new ride, i.e., Don’t spend just to save taxes
- Don’t spend $100,000 on a new vehicle when you don’t need one. It’s $100,000 out the door to save ~$37,000 in taxes. Buyers want to see a profitable business, not one taking every deduction in the book and bleeding the business to save a few bucks in taxes. Show your profits. Profits drive up the price.
Your business isn’t the only jewel in the crown
- Realize there are other valuable jewels. Don’t convince yourself your company is so very special (compared to others) that you’ll get a multiple of earnings outside the normal range.
Don’t get blinded by the digits – Smart buyers look past the numbers
- A smart buyer will be just as or even more interested in the non-financial factors. Make sure all is well with your customers, employees, management team, supply chain, technology, and all the other components that drive the daily operations and the value.
Don’t be the single thread holding the business together
- If you can take a vacation for one, two, or even three months, and upon your return, the company is stronger than when you left, you have quality management. Remember, every buyer is buying your people.
Seize the Moment: Make Moves, Give Raises, and Stay Authentic
- If you are planning to purchase a new machine or add a new product line, do so. If you have a marketing plan to implement, do so. When it’s time to give raises, give them, run your business as if you are not selling. Buyers don’t want to see drastic changes to the business’ operations or else they will be concerned you’ve made other changes to pretty up the business to sell it.
Understand it’s a process and it’s not easy. There are certain things that must happen. Use your advisors they know what to do and how to attract the right buyers.