Adding Value to the “Lone Ranger” Small Business
The “Lone Ranger”
Every business broker has consulted a business owner who thinks their business is worth more than the current market says. This is especially true when it comes to the “Lone Ranger” business owner who has his hands in practically every part of the business. When the owner runs everything, even with several employees, most of the value of the business leaves when the owner exits. Whether you’re an owner thinking about selling or a broker consulting with a potential seller, here are a few basic strategies to maximize the business’s value and ultimately get a higher sales price.
1) Develop an Operational Process
One way to alleviate this problem is for the current business owner to put in place a system for running the business that can be operated by anyone. Examples of operational processes are often seen in franchises and can be extremely helpful with any business exit strategy. The process doesn’t have to cover every possible detail, but buying a proven, documented system gives a buyer more assurance and confidence that they can meet and even exceed the current operation quickly. Business sellers should have thorough, well-written manuals that can be followed by anyone to complete tasks for a variety of situations.
2) Train some Employees
Another simple, and often overlooked, way to help alleviate the “Lone Ranger” problem is to train other employees to run the business. We often speak with sellers who have never approached this concept for fear of giving up control, or even lack of trust that more complicated tasks will not be completed by their employees. This fear and lack of trust can come back to bite when they try to sell their business. Establishing a hierarchy of employees with clear, delegated jobs and tasks (especially at the top) provides the buyer a smoother transition into operating the business.
These are just a few quick, general solutions to a common problem when selling a “Lone Ranger” business. Selling your business can often be one of the biggest financial transactions of your life and it is crucial to maximize the value received for something you worked so hard to build. For this reason, and many others not mentioned, consulting an experienced business broker is always recommended when thinking about selling your business.