As Tony Robbins often says “repetition is the mother of skill”
Your brain learns through repetition, and it can take the same thing being said several times before you actually get it.
So I’m going to just quickly recap on the key point I made last week, because I think this might be one of the most important things I’ve ever talked about.
Remember I was talking about the “Enough” book.
You might even have ordered the book and read it already. I know dozens of people have been in touch to say they have. I hope you’re one of them!
Your future is your most important overhead
This most important of ideas was that your own personal future is the single most important overhead your business will ever have, and that you HAVE to cost your future into your business model. Ie you have to charge enough, and make enough profit to fund your future.
Not next month, or next year, or you know, when the business is making more money. You have to start making your business make enough money now.
And don’t fall into that trap of thinking, I won’t need to worry about a pension.
I’m going to sell my business. For Millions.
You can’t rely on selling your business
You CANNOT rely on a business sale as The Way you’re going to secure your future.
It’s way too risky.
A business sale should be the icing on the cake. Not the cake.
Why your business might not be saleable (at the price you want)
There are so many reasons why either your business might not be saleable, or why you won’t get the amount you want. These are a few of the main reasons why you might not have the golden goose you think you have.
Market conditions and business models
Now more than ever, the pace of change is so fast that business models become obsolete more quickly. Long standing businesses are disappearing for all sorts of reasons and we just can’t be sure like we used to that our business model has longevity, or that the market will continue to need what we sell. So this is a huge part of the reason why you need to be building your future whilst building your business, because getting to sell just isn’t a given any more.
The time when you most want to sell, think you need to sell, can’t face carrying on, and is very unlikely to be the exact time the right buyer wants to buy you. And a buyer will pick up the desperation of business owner and know they can knock you down on price and dictate terms. You want to sell from a position of power, when things are good!
Business dependent on you
Could you be away from your business for 6-12 months and your business still function well without you? Does your business work without you and not because of you?
Any buyer needs to know your business isn’t dependent on you. Otherwise how will it run without you when they buy it? You need to build a management team that, in time, can run the business just as well as you, but without you. As hard as your ego might find that truth, it’s the only way you’re going to exit well. The sooner you start this the better.
Some owners have to stay on for 1-2 years to transition after a sale, but honestly can you imagine working for someone else? And part of your sale price will be deferred, when all you want is the cash in your bank.
Key customer or industry reliance
If you rely heavily on one key customer, or are over exposed in a market sector, buyers will be nervous. In fact if you’re too into one customer you many find your business has little value. You’re just one step away from having no business.
So coming back to what you can do about this.
- Clearly you can’t influence the markets or the pace of innovation but you can make sure you keep at the forefront of changes in your industry and keep innovating – don’t be the one to stick your head in the sand and ignore it all, uncomfortable as it may be.
- You can make sure you’re not hanging all your hopes on one key customer – the golden rule is no one customer should be more than 20% of turnover. Ideally much less than this. You want a good spread of customers – in different sectors.
- You can start to remove yourself from the day to day. Stop being so damn indispensable. Develop your team and empower them to make more decisions – they’ll grow far more quickly and might just have better ideas than you! (Just saying)
- Find out your X number. Talk to a financial planner. Know what you’d need to sell for, whilst making sure you’re getting plenty into your pension along the way, so even if you can’t sell, you know you’ll be ok. And be prepared to sell when the time is right. Don’t be greedy.
Know what is ENOUGH, and know when to walk away.