By Kent Kohn
You have spent the greatest part of the past 20-plus years building your snow and ice management company. Often, that meant working late into the night, sometimes for days on end. But there was the satisfaction you experienced from doing the job right. You enjoyed the camaraderie of working with your crews and the interactions with your clients. You enjoyed the challenges of the career and a job well done. At some point, your company became part of who you are and what you are about.
Now things have changed. Perhaps you have begun to lose your interest, found something more interesting, or you have simply decided it is time to retire.
The decision to sell your company is one of the most difficult decisions you will make in your life. The very best time to sell your company is when three variables - marketplace, business and personal timing - are at their peaks.
Rarely do these variables peak at the same time. Your task in selling your firm is to determine when you believe each of the three variables will combine to maximize the value of your company.
Marketplace timing can be linked to several factors, but the two that generally have the greatest impact on the sale price of a business are the condition of the economy and the availability of similar companies - both of which are out of your control.
When the economy started to slide in 2008, most business owners saw the value of their companies decline significantly. Most business owners that sold during that time received far less favorable terms than those that sold similar businesses prior to the recession. Unfortunately, some business owners still believe their local economies have not fully recovered and, therefore, their company values remain depressed.
The good news is that you can determine when to enter the “For Sale” marketplace. While you wait, differentiate your company from similar firms already for sale.
Selling your business at financial and operational highs is difficult to arrange and emotionally taxing to actually pull the trigger. But that is often when it will bring the greatest purchase price.
Measuring and maximizing the market value of your company involves many factors: current financial performance, projected financial performance, cash flow, margins, equipment condition and value, strength of management staff, status/existence of renewable contracts, client mix, your transition plan, deal structure, and the perception/reputation of your firm in the marketplace.
Are you ready to retire? Owners who plan carefully in advance of the exit date are most ready when the time comes and are best able to leave on their terms.
An exit plan is a comprehensive multifaceted written document that allows a business owner to efficiently transition out of his current firm into the next phase of his life. Do you have an exit plan? If not, consider assembling and maintaining an exit plan as part of your annual financial document preparations.
The key to successfully exiting your business is careful planning. Watch the economy and your local marketplace. Prepare your business to run at peak efficiency. Prepare yourself emotionally, financially and physically. Surround yourself with a knowledgeable advisor to guide the process and experienced professionals (accountant, financial planner, lawyer) to assist you.
There is no substitute for preparation. The better you plan your exit, the easier it will be when the time finally comes to initiate the process of selling your baby.
Kent Kohn is a consultant with Pro-Motion Consulting. Contact him at email@example.com.