Have you ever asked yourself the question of when to exit your business?

When is it time to sell the business you started?

Unfortunately, there are a large number of small business owners who never ask themselves these questions and instead, leave the sale of the business until the last minute. Either wanting to sell to retire or due to family circumstances, such as ill-health. In reality, the answer to the first question of when to exit your business should actually be asked at the outset of starting your business. In other words, it should have been a part of the business plan at the beginning. By planning when to exit the business at the initial stages of starting the business you would be able to identify the most opportune time to sell the business. This one event could make you many tens of thousands of dollars more than if you leave the sale date to chance.

One of my clients recently came to understand this very clearly. We were looking at planning his next business venture when I asked him this question. “When do you want to exit this business?” he asked, “What do you mean?” I replied. “At what dollar amount of value do you want to sell the business for at some time in the future?” This conversation went backwards and forwards until he got the idea that by having a take-out value in mind he could develop the business and generate incomes and profits that would allow the business to be valued for sale at the figure he envisaged at the outset. He suggested he would like to sell the business sometime in the future for $1 Million. Based on a sales multiple of three times profitability he could sell the business for $1 Million when he had grown it to a profit of $333,000.00 approximately. Now he has a target to aim at. We can develop a business strategy that may get him to that figure.

This value became even more alarming for him when we analysed a business he recently sold. He had a small online retail business that he no longer had any desire to operate. He sold it for $20,000.00 However, this business reached a peak profitability level of $140,000.00 per annum just two years ago. Had he sold the business at that time on a three times multiplier he could have sold it for $420,000.00! He missed the opportunity to sell the business for $400,000.00 more than he sold it recently for. Because he had no goal of when to sell the business he was not aware of the real value of what he had created. He had no idea that the opportune time had come and gone. The cost of this ignorance to him was $400,000.00. Had he hired me at the time of him starting his previous business I would have been able to help him identify the opportune time to sell and he could have been $400,000.00 richer.

Many small business owners do not want to hire coaches and mentors because they feel that we are too expensive. I wonder how much my client would have been happy to pay me, had he known I could have helped him earn $400,000.00 more than he did? As a professional coach, I have an obligation to deliver VALUE to my clients and that value can be measured in many ways. Money is only one way to measure value. Value for money is what we are all looking for. So next time you consider hiring someone like me to help you, don’t ask what do you charge, or what will it cost me to hire you? Instead, ask yourself how much value will David bring to me? Only you know the answer to that question. Once you identify the answer to the value question then you can ask yourself how much would I pay for that value? That is the time when you will understand if hiring a coach is good for you or not. Knowing at the outset when to exit your business is paramount to optimizing its value for you. Just like hiring a coach. it’s all about VALUE!