Have you considered selling your business - How?

I am struck by how many of the business owners I meet that do not consider this, and when I raise the subject, they usually tell me that they are relying on a private rental property and a modest pension for their retirement with no further access to finance.

They do not see their business as a saleable asset but as a source of cashflow that will have no value when they stop working
And so often when I look at the financial structure of their business, its only assets are the debtor book, (some of which isn’t collectible), creditors at about the same value as the debtors, some cash in the bank and equipment and stock which would fetch less than book value if sold off.

It’s therefore true, such a business is really not saleable, just something to close down and walk away from; as do 250,000 other UK small businesses owners every year for this very same reason.

However, majority could be sold for a six or seven figure sum if managed differently
Such an amount would transform the owners’ retirement finances from ‘getting by’ to luxury.
Yet I get strong objections to the above proposition such as, “this business is all about me, so it isn’t saleable”

I politely disagree with the above and put it to you that any and every business is saleable  
How?
Well, it is instructive to first look at big businesses, which are all about money and return of investment (ROI) to see what they do. The aim is to not to be as ruthless as them but to learn for free what you can adapt.

Here is what they do (just in their financial management stream – there are 4 others*):

1. Measure financial performance which we call a Business Valuation, Performance and Health Check constantly, comparing each month of the current year to the same month of the previous year to understand what’s happening, why it’s happening and to devise corrective action whilst there is still adequate time.  
2. Manage cashflow to ensure they collect quickly and pay slowly  
3. Focus to improve profitability and business sustainable by implementing growth strategies and suppressing costs through sales, pricing and cost control strategies  
4. Manage assets to minimise the money tied up in them and ensure that each generates a ROI. If not, get rid of it. Areas to consider are: post the corona pandemic, such as; do they still need an office space? Is it more cost effective to outsource manufacture?  
5. Funding working capital, not by borrowing but by invoice discounting, asset finance or equity funding

1. Budgeting & forecasting to decide in which direction they are going by way of business planning and modelling
   
2. Financial reporting systems that show weekly/monthly early trends and forecasts for action now  
3. Management accounting to review on a monthly basis per year in depth what the annual accounts will look like in time enough to manage the outcome  
4. The Finance Acts compliance by getting their business accountants to check them over before each year end  
5. Tracking financial ratios to watch the trends and forecasts that predict how their business will perform if not either corrected or reinforced and aligned with their business plan  
6. Financial planning to ensure that the business sets out with a realistic plan of each year’s performance with the resources and business performance strategies​ in place to achieve it  
7. Financial management by staying on top of the plan and changing direction, strategies, and resources where relevant and necessary to get the best available outcome    
8. Buying financial support effectively by knowing who best can provide it and the right moment to call them in, such as a business advisor

At face value, much or all of this sounds time-consuming, costly and bureaucratic. To an extent it is. However, big businesses perform the above actions for the very good reason that it works, knowing that time invested in doing this provides a very good payback and ensures their survival.

And remember, every big business was once a little one whose founders had the foresight to introduce strong business performance strategies and financial management at an early stage.

The average big business sells for 14x pre-tax profits. Yet I have seen small businesses making £50K pa close down for instead of selling as a going concern for £500K+

It may seem that chasing another order or dealing with a customer crisis is a better use of your time. However, it should account for all you do. Appropriate business and financial management would make the orders come in automatically and prevent the customer problem in the first place.

Knowledge is power and good financial management and other applicable actions gives you the power to make smart decisions that will build a saleable business worth millions.

Most of what I have instanced above are not difficult to implement. And if you find this a challenge, your Business Advisor at RBSS Consulting Ltd, Romford will do it for you, helped by low-cost apps.  
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Please note: not every action mentioned above will apply to your business which is a good reason to call in an experienced and professional Business Advisor for expert guidance. If you can resonate with some of the above points or are in any doubt as to which direction your business is heading in, get in touch with us today and you can be rest assured we will point and lead you in the right direction at RBSS Consulting Ltd.
 
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Your first step is for free and takes 15 minutes by  
Booking a free assessment here
to find out how much your business is worth today, what it should be worth, and the actions needed to get it there. All in a comprehensive report tailored just for you. 
Another RBSS Consulting Business Consultant service…
“Delivering Real Business Solutions”
(*The 5 business streams are Marketing; Operations; Systems; People; Finance)
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