How prepared are you for the future state of your business? How ready is your business to transfer to a new owner? Regardless of the option that best suits you and your business, you’ll likely need to spend a lot of time seeking out information and guidance on the process. When the initial study was done in 2013, less than 40% of all owners surveyed said that they had an understanding of their exit options. In 2023, that number rose to 70%.

If you’re frustrated about scaling beyond what you can personally do or wanting to take a vacation without worrying about the plant burning down while you’re gone, or simply want to leave at 3 to coach your child’s sports team? How do you build a team that shoulders the load with the same discipline and accountability that you bring to the table?

Where you sit today, exiting your business may be a far off thought, but it’s important to see that one day it will be a reality. Even if your exit is 20 or 30 years away, there are things you can do today that will radically increase the value of your business in the here and now, and when it’s time to exit.

Over the past few months you’ve finally started to selectively voice what you’ve been thinking about for over a year. It’s time to sell your business. First, you mentioned it to your buddies at the golf club. Next, you called a friend or two from the past who you seem to recall know something about selling businesses. And then…

You may be like most business owners. Your business is your passion and hobby. Sure, you enjoy R&R. You like golf and travel, but you feel most alive at the helm of your business, not on a yacht in the islands.

But if you want to find your next act, you’re going to need to do some self examination to figure this out. If golf and travel do not sound like an enticing retirement, you will want to find something that is.

While owners of cash rich businesses tend to place a limited financial burden on their companies, enabling strategic operations, strong vendor and customer relationships, and plenty of negotiation options, owners of cash poor businesses tend to place a heavy financial burden on their companies, forcing expedient and shortsighted decision making that often creates rifts with customers, vendors, and employees.

The cash rich/poor dichotomy can become stark in the case of selling your business.

Excessive owner dependence plagues many companies and buyers are on the lookout for it. If you’re looking to sell and retire, and you’re still sitting at the intersection of everything, you’ll likely be unable to fool savvy buyers.

While resolving your owner dependence issue can be a challenging problem to solve, it may be the largest key to unlocking meaningful value in the sale of your business.

When to sell is an age old question. In most cases, we can only answer this question years later with the benefit of hindsight. Trying to figure out the exact right moment to sell your company is an exercise in futility. That said, let’s discuss what we can and cannot say about market timing with the goal of landing at some practical, actionable advice.

Do you continue to feel aligned in your mission? Or has life intervened and little-by-little (or all at once), as it inevitably does, have you become increasingly aware that your shared vision diverged somewhere along the way?

This common occurrence, which can be painfully obvious to observers, often goes unaddressed for months or even years amongst business partners. While ignorance may seem like bliss, it can often do real damage to your bottom line, limiting your exit options, one avoided conversation at a time.

There are other options. Let’s discuss some healthier ways to handle such a situation.

Net Working Capital (“NWC”) is the metaphorical grease that keeps the machinery of your enterprise churning out sales and profits. Yet it is often misunderstood and/or underestimated, especially in growing businesses.

People often joke about how “you have to spend money to make money”. This phrase is often used in the context of capital investments in land, property, plant, and equipment necessary to bring a project from concept to reality. While it’s true that every business requires capital expenditures, the attention afforded to big ticket items like machinery and equipment can result in losing sight of NWC which is necessary to assure the machinery can be run.

As an entrepreneur, you can see the future. Where others see an open field, you see a beautiful state-of-the-art facility churning out new products. Where others see an empty shell building, you envision an automated line that will cut operating costs in half. Where others see an abandoned storefront, you see a new retail concept.

You speak the language of a business operator.

But as you know, sometimes you need a financial partner in order to bring your future vision into reality.