Sell Your Business - Create an Exit Strategy or Exit Plan
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18-Oct-2014 -
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Transcript of Sell Your Business - Create an Exit Strategy or Exit Plan
Bbest Pr8 Areas for Driving Business Value: Attract & Retain Clients
on These Principles
Jeni Cantley, Practice Development Manager
Why Sellability Matters
“Those with a Sellability Score of 80
or more get offers that are 71% higher
than the average business”
Its all about Value and Running a Business that is Valuable to a Third Party – Not about the act of Selling:• Passing a valuable asset onto Family• Planning for the unforseen exit (Health or Financial)
The Opportunity
• 76% of business owners do not have a succession plan, of which many are planning to retire over the next 10 years
• Business owners should create a formal BSP 5-10 years prior to retirement
• Succession planning is complex and small business owners need help
As many as 70% of business owners plan to exit their business in the next 10 years, and the
most common exit plan is selling the business to
another company
Benefits
• Better First Meetings & Conversations
• Opportunity to asses their business – give it a Health Check
• Higher Quality Workshops and Presentations
• Better event Attendance & Engagement – Summary Review
• Expanding Referral Network
• Increase in Client Engagement
• Additional client touch point
• Providing access to additional tools and consulting
• It measures Accountability – Estimate of Value feature
• Prove your worth over the duration of your consulting
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Output ReportReport details the business’ measure on eight key drivers, with an explanation of why each attribute is important and suggestions for improving performance on each metric
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• Overall Score driven by a weighted algorithm made up of 40 questions in a total of 8 categories:
1. Financial Performance2. Growth Potential3. The Switzerland Structure4. The Valuation Teeter Totter (i.e. See Saw)5. The Hierarchy of Recurring Revenue6. The Monopoly Control7. Customer Satisfaction8. Hub & Spoke
Copyright, 2013. Built to Sell Inc
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How to interpret the report
• Score of less than 50: business owner must improve score or opt for an internal transition to a family member or employee(s) over time
• Score of 50-80: the business will likely sell for an industry average multiple*• Score of 80-100: the business will likely fetch a premium over industry average
multiples
*consult a database like “Pratts Stats” for average multiples by industry
Only 6% Score 80 or above
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Copyright, 2013. Built to Sell Inc
Revenue & Quality of AccountingRisk & Reliability of Future Earnings
• Score of less than 50: a business with modest revenue that is either losing money or generating a small profit
• Score of 50-80: a profitable business • Score of 80-100: a large profitable business
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Copyright, 2013. Built to Sell Inc
New OpportunitiesGeographyNew Products
• Score of less than 50: low future growth potential• Score of 50-80: modest future growth potential• Score of 80-100: lots of future growth opportunity
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Copyright, 2013. Built to Sell Inc
Independence•From Employees•From Customers•From Suppliers
• Score of less than 50: heavily reliant on one customer, employee and/or supplier
• Score of 50-80: somewhat reliant on one customer, employee and/or supplier• Score of 80-100: not reliant on one customer, employee and/or supplier
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Copyright, 2013. Built to Sell Inc
Cash Flow vs. Value of the Business (P&L)
• Score of less than 50: a business with a negative cash flow cycle constantly in need of cash
• Score of 50-80: a business with a neutral cash flow cycle – they pay out expenses at about the same time as they take cash in
• Score of 80-100: a business with a positive cash flow cycle that takes in cash at a faster rate than it pays it out
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Copyright, 2013. Built to Sell Inc
How reliable the future stream of profits
• Score of less than 50: a business with little or no recurring revenue• Score of 50-80: a business with a moderate amount of recurring revenue• Score of 80-100: a business with a high proportion of recurring revenue
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Copyright, 2013. Built to Sell Inc
Differentiation
• Score of less than 50: a business with commodity products and/or services with little or no control over pricing
• Score of 50-80: a business that has somewhat differentiated products and/or services yet occasionally must compete exclusively on price
• Score of 80-100: a business with highly differentiated products and/or services that rarely competes exclusively on price
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Copyright, 2013. Built to Sell Inc
SurveyNet Promoter Score
• Score of less than 50: a business with no consistent methodology for measuring customer satisfaction and/or dissatisfied customers
• Score of 50-80: a business with satisfied customers• Score of 80-100: a business with both very satisfied customers and a
consistent methodology for measuring customer satisfaction
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Copyright, 2013. Built to Sell Inc
Owner Dependence
• Score of less than 50: a business that is heavily reliant on its owner(s)• Score of 50-80: a business that is somewhat reliant on its owner(s)• Score of 80-100: a business that is not reliant on its owner(s)
The Hard Wired Process
• Standardized Process
• Before every Initial Consult or Meeting
• Its About Me – Not You
• Better Prepared for First Meeting
• Comparison to Physician: Health History
Success Indicators
Proactively inviting business owners
Presentations/Webinars
Consistently writing/promoting
Partnering
Using as Lead Qualifier
Conversion Rates
Proactively inviting business owners
8 out of 10 will fill out survey
Presentations/Webinars
1/3 fill out survey
122 reports, 1 in 3 turned into consults
Partnering
Referrals – 9 reports, 4 new clients
The Sellability Score
LinkedIN: Sellability Score Advisors Group
For marketing consult contact:Jeni Cantley, Practice Development [email protected] or Skype jenicantley.sellability
Join Us on LinkedIN