Tripping Over Pitfalls

Filters: we all have them and sometimes they make it hard to see clearly. It’s challenging to know who to trust and who really has your best interest at heart.

That’s the importance of an advocate, someone who has your back, helps you avoid pitfalls, catches you when you fall, and cheers you on.

Helping my clients position their business for their exit, it is clear that every advisor has a unique filter:

• Business Advisor: my filter is from a business management standpoint, building real business value and helping you achieve an Elegant Exit™. I am your advocate – always looking out for your best interests.
  
  
• Accountant: crucial for the exit process, CPAs see everything from a mathematical perspective. From accounting to tax consequences, this advisor can guide the financial aspects.
  
  
• Attorney: a business attorney experienced in buying and selling companies is a must-have if your exit includes selling your business. Their filter is from a legal, deal structure, and compliance point of view.
  
  
• Valuation Expert: determines the business value based on many factors. Their filter is from a strategic and accounting point of view. The value they assign to your business helps you position in the right market to find the right buyer.
  
  
• Business Broker: the right broker can be very helpful, but their filter is largely transactional. Working on commission, they work hard to close a sale quickly, sometimes sacrificing what’s best for the business owner.

With all these different filters, the advice can be well-rounded, but the challenge comes in distilling all this siloed information to make solid decisions about your future.

In my case, as the Business Advisor, I can serve as a quarterback, asking strategic questions, helping integrate all the responses, and guiding your decisions for this important life transition.

Today’s Question:

What are the pitfalls to watch out for when you're thinking of selling your business?

But Here’s the Twist . . .

Exit planning is both an art and a science. While the numbers and financial strategies are crucial, the pitfalls often lie in the intangibles—the aspects that transcend balance sheets and profit margins.

You're not just selling a company; you're transitioning a piece of your identity and legacy. Your business is an embodiment of your passion, hard work, and aspirations.

It’s a mistake to overlook the emotional component of exiting your business. The stakes are high, and you will likely experience doubt, fear, confusion, frustration, and even anger.

That’s why having a roadmap from the very beginning is crucial. The most important part is knowing what you want your life to look like before, during, and after your exit. Your roadmap will evolve over time but provides guideposts that keep you grounded and in control.

The roadmap is the first step to an Elegant Exit™. Your exit can lead to wealth if you choose to sell your company, but what brought you here won’t get you there.

An Elegant Exit™ requires a new way of thinking and new skills, starting with your roadmap.

Now What?

What are the biggest pitfalls I see when women are thinking of selling their business?

1. Getting a business valuation too early in the process. The valuation experience is time-consuming and expensive, and the valuation will be out of date within a few months. Considering it takes about 5 years to position your company for sale, I recommend you spend that time and energy focusing on building real business value and positioning your company for a streamlined exit.
2. Engaging a business broker, thinking they will help build value and position your company. I’ve seen way too many business owners get talked into working with a broker and then realize the broker’s filter is transactional and commission based. The right broker can be very helpful when you are ready to sell and have all the necessary value pieces in place, but doing so early in the exit process can work against you.
3. Believing the things you value will also be valued by an eventual buyer. For example, it’s a widely held belief that building an operations manual is valuable when you’re ready to sell. While an operations manual is extremely valuable in standardizing your business processes, streamlining staff training, and building trust with clients, your distant buyer may not care at all about your processes. They may be primarily interested in your client list and other business assets.

You can avoid these pitfalls and many others with sound advice and an advocate on your side. Understanding the filters through which your advisors see helps you combine their good advice to form a complete picture of your path forward.

With that said, it concerns me that very few women are planning for this major life transition: their business exit. That leaves your life’s work, your impact, and your legacy in the hands of fate.

At some point, you will exit your business, whether it’s voluntary or not. If you needed to step away from your business today, due to a health problem or a family issue, would your company fall apart?

I’ll challenge you with this question: how can you bring the simplicity and elegance of the little black dress to a life-changing transition, like your business exit?

I firmly believe – and have built my business around – the idea that business success and wealth in the hands of women elevates society as a whole.

An Elegant Exit™ requires a new way of thinking and new skills, a great team of advisors, and an advocate on your side who can integrate all those filters into a cohesive vision.

Discover your Exit Readiness Index™ with this assessment: http://she-exits.com/

What are the pitfalls to watch out for when you're thinking of selling your business?

I'd love to hear what you think.  I read and respond to every email personally.