We’ve covered a lot of ground over the last few posts, and if you’ve implemented some (or all) of the strategies we’ve discussed so far, you should be quite happy with your results.
But as you’ve seen, the 9 Steps we’ve covered are all related to marketing; ways to increase the number of customers you have, increase the size of each order, and increase the number times people buy from you.
In other words, everything so far has been about increasing your customer lifetime value through better marketing.
But if you want to grow your business sustainably, there’s much more we need to cover
There are dozens of other opportunities for you to scale your business including:
- Implementing additional strategies to help you retain more of your customers for longer (customer reactivation campaigns, for example)
- Finding ways to become more efficient and productive throughout each area of your business
- Use all kinds of measures to improve your business’s reputation, visibility and brand awareness in the marketplace
- Implementing improvements in areas such as your core business processes, your customer service, your information gathering and data mining systems, your staff turnover, morale and loyalty, and your customer loyalty
- Strategically up-skilling your management and staff so every one of your customers can enjoy a superior customer experience compared to what your competitors can offer
- Systematically reducing costs in every area of your operations
- Implementing systems for better customer complaints handling which can turn complaints into additional sales and referrals
- Plus many more…
Simply by focusing some time and resources on any of these areas, you could see a substantial increase in your business’s growth and ultimate sale value.
Then there are risks that can derail even the most successful businesses…
For example, relying on one (or a small number) of anything carries a very high risk –
- 1 major customer can go bankrupt or change suppliers
- 1 major supplier can raise their prices or decide not to supply you any longer
- 1 core employee can take your customer database (and the rest of your IP) down the road with them when they start their own business
- 1 great assistant who knows where everything is hidden can get sick, leave to look after children, or walk out the door for any number of reasons
- A landlord could increase your rent, based on the growth in the value of his building, to the point where your business is simply unsustainable (see later)
Some other potential risks include:
Without a thorough understanding of contract law, you may miss a hidden clause in your lease agreement that allows your landlord to increase your rent sharply, or evict you from the premises, due to exceptional circumstances.
You may not be prepared for a natural disaster (or an event occurring at another business or property) that affects your business, shuts you down for days or weeks, and causes significant disruption and losses.
We touched on this above, but you may lack the critical HR, IT, OHS, Management, Accounting and other systems required to manage growth, leading to poor customer experiences, loss of sales, and irreparable damage to your brand and reputation.
These are all very important, but there is one critical factor many business owners neglect until much too late.
And that is having a concrete succession plan, or a plan for how you will exit the business and attain the maximum value possible for your years of hard work and dedication.
Why Is Exit Planning So Important?
There’s an old saying that’s very relevant here: If you don’t know what your destination is, then any road will take you there.
Nowhere is this more relevant than in planning for the eventual sale of or exit from your business.
There are so many things you’ll need to consider.
And if you want to maximise the value (and sale price) of your business, and make plans for your life after business, while having a relatively smooth handover process, you’ll want to start thinking about them at least 3 years, and preferably 5 years, before your exit date.
You’ll want to consider things like:
- Determining the true value of your business today, and then implementing value enhancement strategies that create sustainable, long-term growth that a new buyer will be happy to pay for
- Calculating the net proceeds required after the sale is finalised, so you can create a plan now for achieving that outcome
- Dozens of personal readiness, personal financial planning and lifestyle considerations for when you move to a life after this business, or into retirement
- Deciding exactly what the “deliverables” will be when a new buyer takes over the running of your business
- Estate planning considerations so your legacy is protected for future generations, or distributed according to your wishes
- Deciding whether your target buyer will likely be from within your family, within your existing management team, an outside buyer or a Venture Capital firm, and positioning your business accordingly
- Adding to, retraining or removing team members or management who are not conducive to helping you prepare the business for sale or for your exit
- The sales process you will use to attract the most highly qualified buyers to bid for your business
- And much, much more…
As you can see, there are a host of things to consider when you are planning for the sale of (or exit from) your business.
And making the wrong decisions could cost you hundreds of thousands of dollars in sale value or higher taxes. Not to mention the personal factors you’ll need to consider that we talked about above.
You really need professional advice and guidance to make the most of the work you’ve put in to building your business.
And I can help.
Each month I hold a limited number of Free Business Strategy Sessions designed to help you grow your business while enjoying the ride, while creating a plan to achieve the highest possible sale price, and the lifestyle you want to enjoy, when it’s time to exit.
Would you like to join me?
If you’d like to schedule one of these Free and obligation free one-on-one sessions, even if you’re just curious and you’re not planning on selling or exiting your business at the moment, let me know by email at firstname.lastname@example.org or call 1300740066 and I’ll set things up for you.
About The Author: James Huy Vuong is a CPA, Registered Tax Agent, Business Broker, Certified Exit Planner and the owner of Your Accounting Partners, an Associate of Negotia Group. Partnering with businesses from start to scale thru to sale.
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