Whether you’re planning to sell your company sometime soon or in the future, now is the time to ensure that your business doesn’t depend solely on you for its success.
According to Sellability Score’s research into 2,300 companies worldwide, there are two key factors linked to the probability of your business receiving an offer when it’s time to sell:
- Your business can survive the “hit-by-a-bus” test, and
- Your business has a management team.
Let’s look at both of these factors in more detail, because having both in place means you’re twice as likely to get an offer for your business:
1. The Hit-by-a-Bus Test
Say you’re out of action for three months and unable to work, would your business continue to run smoothly? The more your staff and customers need you, the less valuable your company will be to a potential acquirer.
One good way of making your business more independent is to begin spending less time at the office. Start by not working evenings or weekends and don’t reply if employees call. Once they get the picture, the best ones will start making more independent decisions. This shift will also expose your weakest employees — the ones who need training or need to find another job.
It might come as a shock to find out just how much your business has become such an essential part of you, but if you’re going to sell your business one day, you need to look at it as an inanimate economic engine, not as something that defines who you are.
2. Management Team
If you don’t have a management team, hiring a second in command is a good first move. A 2iC
can help you balance the demands of running your company and advance your targeted exit time.
As communicated to Inc., Silicon Valley-based, Bob Sutton, author of Good Boss, Bad Boss, offers this 5-step plan for hiring a 2iC:
Step 1: Identify someone internally
“The research is clear,” says Sutton. “Unless things are totally screwed up, internal candidates have a strong tendency to outperform external leaders.”
Step 2: Give your 2iC prospect(s) a special project, one that allows them to demonstrate their leadership skills to you and the rest of your team.
If your candidate or one of your candidates excels, it will be clear to your team why they were selected.
Step 3: Communicate your choice.
If you pick a 2iC from an internal pool, explain your choice to the rest of your team.
Step 4: Value those who didn’t make the cut.
At the same time as you communicate your 2iC choice, wrap your arms around those you passed over and make it clear how much you value their contribution.
Step 5: Shift from manager to coach.
“The transition from manager to coach is a gradual evolution where the goal is to ask more questions, spend more time listening, and spend less time talking and directing,” says Sutton.
Wondering if you have a sellable business? Contact the MAXIMA Group for a consultation. We focus on privately held companies with annual revenues of $3 million to $60 million. We also advise larger public and private companies on buy-side engagements.