Maximize Selling Price Of Your Business

Copyright Jeff Haltrecht | family business advisor 201110 Ways To MaximizeThe Future Selling Price Of Your BusinessTuesday, June 14, 2011

“Why Should I Be Thinking Of Selling If I’m Not Ready To Sell?” ‣ Every business should be sold or transitioned at some point, yours included. ‘When?’ is up for debate. ‣ But when that time comes, you need to have put in place a number of Copyright Jeff Haltrecht | family business advisor 2011 items in order to maximize the money you will receive from the new owner (regardless if that person is family or not). ‣ Waiting until you are ready to sell may prove to be too little, too late to maximize the value of your business. 2Tuesday, June 14, 2011

Its Incredibly Hard To Predict When To Sell The Business ‣ The right time to sell is easy in hindsight. (It was at the peak of a 5- year sales run, right before the competitor introduced a new product!) ‣ It’s hard to predict the future, Copyright Jeff Haltrecht | family business advisor 2011 knowing what that competitor, customer, or market trend will do to your sales. This is probably the most unnerving part of owning your own business! 3Tuesday, June 14, 2011

When Your Gut Says Its Time Then Its Time ‣ No… the right time to sell is when your gut says you have given everything you can to making this company the best it can be. ‣ You know in your heart that someone Copyright Jeff Haltrecht | family business advisor 2011 else will be in a better position to build on your legacy long-term. 4Tuesday, June 14, 2011

Be Prepared For When Its Right; Put Things In Order Starting Today 1. Do one thing really well 2. Remove yourself from selling the company’s services 3. Build leaders that will make effective decisions without you 4. Put in place an incentive plan for the key senior most leaders 5. Ensure positive cash flow 6. Create a pipeline of new products or services 7. Pay down debt to a manageable level 8. Have a 15 year vision and a 3 year strategic plan Copyright Jeff Haltrecht | family business advisor 2011 9. Deploy technology that leads to improved productivity ‣ Some companies can be sold right away, while 10. Improve employee productivity by removing roadblocks others need a few years to put some order into things. ‣ What follows is my list of the 10 most important items you can do to help maximize the wealth you will receive the day you decide to sell or transition. 5Tuesday, June 14, 2011

Do One Thing Number Really Well 1 ‣ Narrow your focus to one area of business and do that better than any other company. You can have a number of products that you make or a variety of categories that you retail, but they must all be tied to the same tightly focused theme. Copyright Jeff Haltrecht | family business advisor 2011 ‣ Provide your customers the opportunity to buy repeatedly, giving them choices to move up from ‘incredibly affordable’ to items that cost more, but come with additional added value. 6Tuesday, June 14, 2011

Remove Yourself From Selling Number The Company’s Products/Services 2 ‣ The owner of a business must not be the same person who sells its products or services. If this were the case, why would I want to buy your business? I would have to keep you as my sales leader and you and I probably don’t want that! Copyright Jeff Haltrecht | family business advisor 2011 ‣ Remove yourself from selling and doing the work, instead focusing on inﬂuencing your strategy, people, and productivity. Your role now, more than ever, is to build future leaders who will carry on without you. 7Tuesday, June 14, 2011

Build Leaders That Will Make Number Effective Decisions Without You 3 ‣ Coach your leadership team to make decisions without you. Yes, you still need a say in high-risk situations, but the day-to-day operations must be theirs to manage. Copyright Jeff Haltrecht | family business advisor 2011 8Tuesday, June 14, 2011

Put In Place An Incentive Plan Number For The Key Senior Most Leaders 4 ‣ Smart employees start to sense when you are preparing to sell your company. They feel a shift in how you go about things. ‣ While you must deny the company is for Copyright Jeff Haltrecht | family business advisor 2011 sale publicly, you can and should provide the most important leaders with an incentive to stay with the company through the transition, and for up to 3 years after. 9Tuesday, June 14, 2011

Ensure Positive Number Cash Flow 5 collect sooner increase sales ‣ Buyers pay more for companies reduced cost of goods with positive cash ﬂow. Do as much as possible now to reduce the days reduce expenses outstanding on receivables or even charge up-front for services. charge up-front Copyright Jeff Haltrecht | family business advisor 2011 10Tuesday, June 14, 2011

Create A Pipeline Of Number New Products Or Services 6 ‣ What a joy it would be for a new owner to have products ready to launch. The value of this future revenue increases their ability to pay a higher price, driven by a greater conﬁdence in the ability to get a return on their investment. Copyright Jeff Haltrecht | family business advisor 2011 11Tuesday, June 14, 2011

Pay Down Debt Number To A Manageable Level 7 ‣ The less debt the company has, the more valuable it is to a buyer. Money the new owner is prepared to invest can then go directly to sales and marketing initiatives that will deliver increased proﬁts sooner, vs. being required to reduce debt load. Copyright Jeff Haltrecht | family business advisor 2011 12Tuesday, June 14, 2011

Have A 15 Year Vision Number And a 3 Year Strategic Plan 8 ‣ In most cases, the current owner can do a better job of painting a picture of the opportunity than a prospective buyer because of the intimate knowledge you have of the company and industry. Copyright Jeff Haltrecht | family business advisor 2011 ‣ Show the prospective buyer what great looks like and they will pay for the opportunity to make it a reality. 13Tuesday, June 14, 2011

Deploy Technology That Leads Number To Improved Productivity 9 ‣ Technology is a catalyst to increased profits because of how it improves productivity. It can be a piece of manufacturing equipment or software that helps track customer purchases; in both cases, the net benefit is improved efficiency. ‣ It is best to steadily spend on technology Copyright Jeff Haltrecht | family business advisor 2011 over the years so there is no one-time major expense. Future buyers appreciate the attention given to efficiency and will feel more comfortable paying for its steady deployment. 14Tuesday, June 14, 2011

Improve Employee Productivity Number By Removing Roadblocks 10 ‣ While this is the last of the 10, it is no less important than the others. The more productive your employees are, the happier they are with you as their manager and the company. This translates into reduced turnover, more discipline, better ideas, and faster Copyright Jeff Haltrecht | family business advisor 2011 execution – all leading to improved proﬁts. ‣ In the due diligence step of a sale, the buyer can sense if people are productive or not. Make the necessary changes now by asking your people what is keeping them from being more effective and then acting on their suggestions. 15Tuesday, June 14, 2011

When The Time Is Right Someone Else Will Build On Your Legacy ‣ Selling or transitioning your company is the natural and right thing to do. It maximizes your wealth, while continuing to provide jobs for your employees that help feed their families. Copyright Jeff Haltrecht | family business advisor 2011 ‣ Feel good about this transition and look forward to doing something different with your energy, time, and wealth. You have earned it! Cue the music, please! 16Tuesday, June 14, 2011

Lead With Your Entrepreneurial Spirit While Accessing Breakthrough Solutions the A bout r! a utho ‣ I believe being a trusted advisor involves listening ﬁrst. The more I seek to understand your business and what you are dealing with, the richer the dialogue becomes. I have a friendly and engaging work style that is balanced between asking questions, challenging, and Copyright Jeff Haltrecht | family business advisor 2011 providing solutions for you to consider. ‣ What I don’t do is make decisions for you. Our conversations are designed to stretch your thinking, for me to be a sounding board, and most importantly, a Jeff Haltrecht | family business advisor catalyst for you and your company’s growth. 17Tuesday, June 14, 2011

Treating You With Respect, While Challenging For Better Performance the A bout r! o auth Strategic Thinking ‣ When applied correctly, values guide behaviour Dev and set the tone for interaction between Lea opment Mod ness eling people. Here is what you can expect when we el ders work together: i Exceptional Bus hip Experience ‣ Treating you with respect Copyright Jeff Haltrecht | family business advisor 2011 n M ar atio ke ‣ Challenging for better performance ov tin g Inn ‣ Helping you be internally driven Jeff Haltrecht | family business advisor ‣ Putting ideas to action ‣ Embracing change as the path to opportunity ‣ Communicating candidly ‣ Delivering results 18Tuesday, June 14, 2011

A Safe And Private Place To Have A Proactive Discussion s Pro duct Strategic Growth Plans ‣ Helping small to mid size business Build your business with powerful yet simple strategies that add to company wealth owners realize wealth within the company so that when you choose to Family Business Advisor transition or sell sometime in the future, Working one-on-one, we take a solid look at your strategic plan, leadership style, and the business is valued at the highest price management productivity, all with the intent of possible. helping you realize value within the company Copyright Jeff Haltrecht | family business advisor 2011 BoardSmarts™ Designed to give the senior leader(s) their own team of seasoned advisors who focus on providing solutions, while being a catalyst for leadership development and long-term business growth. 19Tuesday, June 14, 2011

Have A Terrific Day! Contact Information Building Company WealthTM ‣ WEB & BLOG ‣ TWITTER ‣ LINKEDIN Copyright Jeff Haltrecht | family business advisor 2011 ‣ EMAIL ‣ PHONE - 905.601.0311 ‣ OFFICE - Oakville, Ontario, Canada 20Tuesday, June 14, 2011

Maximize Selling Price Of Your Business

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