The statistics and trends indicate that during the next several years an unprecedented number of companies will enter the market to sell. This phenomenon is anticipated as a result of Baby Boomer owned companies, and we have well documented these statistics in our book, The Exit Strategy Handbook. In that book, we state that the annual number of companies boomers will put on the market will average 378,000 compared to an historical average of 24,500(Mills, p.36). Because of a tremendous buyers market that is emerging, we are urgently encouraging business owners who plan to sell during the next few years to do the things necessary to enable their company to exceed the competition in order to get the selling price they desire, at the time they desire. But what about the owners who have no intention to sell during the next 3-5 years? What should they be doing? These owners should be leading, managing, and running their businesses as if they were exiting at any time. Why? First of all, it is an excellent way to maintain the company at a high rate of efficiency in a brutally competitive world. Secondly, every owner may be exiting earlier than they anticipated through any number of reasons. Even if you are not planning to sell in the near future , below are three things you need to be continually doing.
- Minimize and Eliminate Distractions– When Wilbur and Orville Wright were trying to prepare to return to Kitty Hawk so they could continue to work on their flying machine, they were distracted due to running their bicycle business in Ohio. They decided to hire a competent individual to take care of the bicycle shop and that man was Charlie Taylor. He later said, “So far as I can figure out, Will and Orv hired me to worry about their bicycle business so they could concentrate on their flying studies and experiments….And I must have satisfied them for they didn’t hire anyone else for eight years(McCullough, p.57).” Be the leader and visionary, hire excellent managers, and delegate to them so you can do what you do best.
- Increase Sales Diversification– A company with all of their sales tied up with just a few customers is both dangerous and reduces the value of the business. Invest in quality sales people and management, train them with good programs, and build a compensation system that rewards them handsomely.
- Improve Processes and Efficiency– Measure profitability correctly and then manage it rigorously by diving into the details. Assume nothing. Jonathan Byrnes said, “In my research and work with companies in a wide range of industries, I have found that 30 to 40 percent(Emphasis mine) of each company’s business-by any measure (accounts, products, transactions)-is unprofitable(Byrnes, p.15).”
Stay ready to sell if a need arises by improving processes and efficiencies, increasing sales diversification, and minimizing distractions.
*Mills, Jerry L. (2013), The Exit Strategy Handbook
*McCullough, David (2015), The Wright Brothers
*Byrnes, Jonathan L.S., (2010), Islands of Profit in a Sea of Red Ink