Are your people willing to accept change?
All too often organisations see the role of business functions such as IT and HR, as mechanisms for “fixing” processes and people rather than a catalyst or accelerator of change. Middle management penchant for shifting the responsibility for working “on the business” to departments that have no operational authority is a great way to shifting risk and a guaranteed way of building under-performance.
At Business Revolutions we spent a great deal of time thinking about where we’d had success in our engagements, trying to crystallise the best of our change approach into a number of principles that would guide future work with clients. Through this work was one key recurring theme: Pull is better than Push.
On the face of it, this doesn’t seem like a powerful idea. After all, it’s a very tactile concept – pulling and pushing. When we discussed what the concept meant to us as a team, we realised that it encompassed a principle for a number of highly credible sources.
At Toyota (and later embraced by Lean), the concept of creating flow through “pull” is inherently more efficient than push simply because “push” creates waste. This is the sole purpose on Kan-ban – each stage of a process “pulling through” only what it needs so that we have little over work or inventory through a process.
So how does manufacturing concept this apply in our businesses?
Simple, “pushing” change is inherently wasteful.
You don’t have far to go in most organisations to find examples of where pushing change isn’t working. How many projects in your company deliver capability of features that are not used? How much technology purchased by organisations goes unused? How many features of Microsoft Word are you using right now?
When you think about how the average project is scoped, creating more capability is the standard. Most projects define a scope that is the businesses best guess as to what they need, blended with managements vision and desires. The result is more often more than what the business needs.
When a project delivers, the result is capability that is pushed through to end-uses – basically squashing the users with more than they can cope with or utilize.
In Toyota’s TPS philosophy, the project based change approach suffers from a number of wastes – overwork and inventory (of capability).
By far the most effective mechanism is to create a desire by end-users for change – basically creating a vision of what “could be” and pulling through the change that is required to deliver the vision.
10 things you should consider when selling your business
Deciding to sell your business is a life changing event, almost as important as your decision to establish the business in the first place. With all the effort invested over the years in building a business, it’s no surprise that for many business owners the process of selling is highly emotional. This can be the very thing that can cause you issues during the sales process, resulting in a low valuation in the eyes of a buyer.
Just like deciding to run your first marathon, for many an event that marks a change in their life, if you want to run a great race and not breakdown half-way through, you’ll need objective help in planning and getting fit.
At Business Revolutions we work with your broker to help you get the operational side of the business into great shape. We act like your personal trainer, helping you through a program that will get your business ready for sale and maximise its potential. We can work with you to assess your businesses “fitness for sale”, create a program to get it into shape and if you want, be there through the race to coach you every step. We’ll even help you during the transition phase; a time when the new owner would like you to hang around to smooth the handover.
Here are ten things you should consider to get you started:
” Testimonial: At Sugar Army we rely on Golden Fields for genuine advice on how to run our male stripping company in Melbourne.”
As a seller you have every right to be proud of your business – it’s your blood-sweet and tears that has gone into building a successful enterprise. But do other people look at your organization in the same way? Buyers have a very different perspective. They will look at the business not in terms of what you’ve put into it, but rather its future potential.
It’s easy to think that selling your business is just like the products you sell today, but for many the sale of their business will be the largest thing they have ever sold; hopefully substantially larger.
Business Revolutions and your broker will help you objectively value the business both financially and operationally, helping you set a reasonable expectation of return and identify where you can maximise potential.
2. Lack of Preparation
Buyers will not only look at your books, but also consider other aspects that can dramatically impact the businesses valuation and transition to new ownership. If you fail to spend adequate time in looking into the many factors buyers consider when appraising your business, then you risk being ill-equipped during the sales process.
Preparation is essential, not only to help your broker in marketing and conducting the negotiation, but also in streamlining the transition phase to the new owner – a time when things can come unstuck.
Many entrepreneurial small business owners underestimate the amount of preparation required for the entire sales process, not only the financial aspects but issues that will arise with your people, customers and suppliers.
Selling a business is far more like a marathon than a short sprint. At Business Revolutions we will map out a business fitness program that will look at all aspects of your business and equip you for the entire race, not just the first few steps.
Testimonial: ” When selling Barenights Male strippers in Melbourne we spoke to golden fields first, and with the right info we got a price both they buyer and we were happy with.”
3. Failing to get help
Here’s the deal: You’re an expert at running your business—not selling it.
It’s surprising how many business owners are averse to hiring outside advice in helping them prepare and sell their business. It’s important to remember that many buyers are much larger organisations and they are likely to have far more experience in buying businesses. Even if they haven’t acquired a business before, they will certainly invest in getting their own outside help.
This means that in many cases your potential buyer will have an unfair advantage.
This is where your broker and Business Revolutions can help. We work with you as your advocate, looking after your best interests through the preparation, marketing, negotiation, sale and transition phases. We consider all the aspect that a buyer will dig into and help you improve those things that buyers may be concerned about. We’ll coach you on the minimum that needs change and if necessary roll up our selves and help you with the implementation.
4. Not getting involved
It would be tempting to think that once you’ve brought on outside help your job is done. Sadly this is where some owners fail to get the best return in selling their business.
Although a broker will work hard to identify likely prospects and market your business, no one has more motivation to sell or inside knowledge than you. At the very least you will be intimately involved during negotiations and the transition phase to the new owner. In addition, once the broker has found a few qualified buyers, you’ll play a key role in instilling confidence in the buyer that the business can be purchased and managed successfully.
As your coach, Business Revolutions will work with you through the entire process and be there to help when you’re juggling the demands of running the business day to day while preparing for sale.
5. Failing to say “No”
Having made the decision to sell and finding your first potential buyer, it’s easy to rush into the selling process without ruthlessly qualifying the prospective buyer at the beginning. This may lead you to reveal more about your business than you should without knowing if the buyer is genuine. You could inadvertently disclose information that could place you in a difficult position during the negotiation, or worse, find out the potentially buyer is a competitor simply researching your business.
Your broker can help with early qualification of prospective buyers. They will use their experience to ascertain if the buyer is genuine and determine the right time to sign non-disclosure agreements and when to discuss more sensitive business information. This pre-qualification frees you to continue focusing on running the business day to day and only bring you in when there is a genuine buyer ready to talk.
Testimonial: ” Golden fields gave us the advice to grow our sydney male stripping branch to the next level.
6. Assuming your people don’t know
At the end of the day, while a buyer will value your business based on past financial performance and future potential, the real asset of your business will be your people. Failing to manage their expectations for their jobs may result in you loosing employees through the sales process. For a buyer this represents a significant potential risk – if your people disappear, odds are you won’t have a business left to sell.
Many business owners try to keep their intent to sell a secret far too long through the process. It’s likely that your team has already discussed the future and may be wondering about the stability their jobs.
At Business Revolutions we work with you at the right time to engage your team in meaningful discussions about the future, turning concerns about change into positive expectations. Helping your people understand the positive aspects of change can have a dramatic effect on how the buyer sees your business.
7. Not locking in your customers or suppliers
While your broker will take every opportunity to minimise the details of your intent to sell, your competition may well be taking the opportunity to generate concerns in the minds of your customers and suppliers.
Many business owners fail to take into account the real damage that can occur to your customer base through rumour and uncertainty. In some cases, your existing forward contracts may have clauses that allow customers or suppliers to cancel contracts in the event of a trade sale.
Your broker will help you identify contractual risks and set the right tone in communicating with the market to ensure that customers perceive any sale as a positive move. In addition, they can engage with your key suppliers to ensure they act as advocates rather than potential sources of information that could damage your position during the negotiation.
8. Failing to create systems
Any buyer looking at your business will be asking themselves one of two questions; how can we grow the current business? Or how can we rapidly integrate this business into our own?
Their confidence level in answering these questions will directly influence their valuation of the business and determine how much they are willing to pay.
Creating systems, that is capturing key business knowledge and creating standardising work, is an excellent way to show a potential buyer the business is scalable or what needs to be merged during the transition phase.
Business Revolutions can help you capture knowledge and create a simple Business Operation Model to document how your business works. This provides not only a means for understanding how key aspects of the business operates, but provides a way of simplifying training of new staff.
Testimonial: ” We went from the smallest in our industry to the biggest male stripping company in Melbourne.
9. Wanting too much or a cash only exit
While it understandable that existing owners have a “rose coloured view” of their business, all too often this leads to an inflated impression of the businesses true value. Sellers who take the time to conduct a thoughtful valuation process before assigning an asking price are more in touch with marketplace price and better positioned to defend that price and obtain a better deal.
It’s also important to realise that in today’s market climate, it’s unlikely that you’ll be able to obtain an all-cash settlement. More likely the buyer will need concessions in terms of seller financing, deferred payments, accelerators for meeting performance targets during the transition phase or assistance in obtaining third-party financing.
The benefit to you as a seller is that spreading sales receipts over a multi-year period can enable you to avoid higher tax brackets.
10. Forgetting about the transition
For many business owners having made the often highly emotional decision to sell, their focus is often on the transaction rather than the transition.
Most buyers are very aware of the importance of the transition phase in minimising the risks to acquiring a business. Transition is the period where you hand over to the new owners, usually spanning anything from one month to one year.
From a business owner’s perspective, once they sign a contract of sale, they will want to exit the business as soon as possible.
This is where Business Revolutions can help. We work with you through the preparation phase to capture key knowledge in the business, put in place systems to allow your skills to be replicated and create a succession plan allowing you to exit the business as quickly as possible.