Delivering Marketing Joy is an award-winning interview show that helps marketers level up. Each week, Kirby Hasseman interviews the best and brightest minds in marketing to help you level up. This time on Lessons from DMJ, Kirby talks with Jonathan Baker about what entrepreneurs who want to sell their business need to know! Watch now!
Lessons from DMJ: Advice on Selling Your Business
This time on Lessons from DMJ, Jonathan Baker, the practice lead and M&A services for Punctuation, shares invaluable advice for entrepreneurs contemplating the sale of their business. The decision to sell a business is monumental and involves numerous factors that need careful consideration. This article will delve into the key aspects that entrepreneurs need to keep in mind, from determining the value of the business, the importance of the terms of the deal, the emotional toll of selling a business, to knowing when to sell or keep building.
Each of these aspects is critical and can significantly impact the outcome of the sale. They are not only about the financial implications but also about the emotional and lifestyle changes that come with it. So, let’s dive in and explore these aspects in detail to equip you with the knowledge you need to make an informed decision.
Determining the Value of Your Business
Understanding the value of your business is the first step in the selling process. Buyers determine the value of a business based on their goals and what they value in the business. This can vary significantly from one buyer to another, depending on their strategic objectives and the specific aspects they value in a business.
Several factors can influence the value of a business. These include the magnitude of profits, the positioning of the business in its market, client concentration, recurring revenue, location, and the extent of the business’s reliance on the founder. Each of these factors can either increase or decrease the perceived value of the business to potential buyers.
The Importance of Terms in the Deal
The terms of the deal can often be more important than the valuation itself. These terms can dictate the buyer’s continued employment, their ability to retain clients, and their post-sale lifestyle. The valuation is a point-in-time number, but the terms of the deal can have long-term implications on the buyer’s financial situation and lifestyle.
It’s crucial to negotiate terms that are favorable and align with your post-sale plans. This could involve clauses regarding your continued involvement in the business, guarantees about client retention, or stipulations about your lifestyle after the sale. Understanding and negotiating these terms can make a significant difference to the outcome of the sale.
The Emotional Toll of Selling a Business
Selling a business can be an emotional rollercoaster, akin to buying a house or dating. The process can be filled with excitement, despondency, and everything in between. It’s crucial to stay focused on running the business throughout the process, as getting too caught up in the sale can distract from the day-to-day operations.
Remember, the sale process can take time, and it’s essential to keep the business running smoothly during this period. This not only maintains the value of the business but also keeps you grounded and focused during the emotionally charged sale process.
Knowing When to Sell or Keep Building
The decision to sell or continue building your business is a significant one. It should be based on revisiting the reasons you started the business in the first place and considering the life-changing amount of money that a sale could bring. It’s essential to weigh these factors carefully and make a decision that aligns with your long-term goals and aspirations.
Remember, selling is not the only option. There may be other avenues to explore, such as partnerships, mergers, or even franchising. It’s crucial to consider all these options and choose the one that best suits your financial situation and future plans.
Conclusion
In conclusion, selling a business is a complex process that requires careful consideration of various factors. It’s not just about the financial implications but also about the emotional toll and lifestyle changes that come with it. Selling is not the only option, and sometimes it may be financially better to not sell the business.
To learn more about these aspects and get professional advice, consider reaching out to Jonathan Baker at Punctuation. With their expertise in M&A services, they can provide you with the guidance you need to navigate the sale process successfully.
Thanks for learning from the latest “Lessons from DMJ” with Jonathan Baker. You can find all of the content we create on our blog page here. And if you want to create a marketing campaign that truly Hits The TARGET, check our FREE TARGET Marketing Playbook here.
