For more than 25 years, I’ve been involved in business coaching and consulting with entrepreneurs wanting to exit their businesses. I’ve also had the experience of selling my own businesses several times. Recently, I helped a client grow the value of their business from £750,000 to a staggering £10 million! Although many business owners dream of selling their business one day, very few, less than 2%, achieve this goal. Why? When selling a business, selling profitability is not enough. All too often, owners are so heavily involved in the tasks required to run their businesses that they fail to see the true opportunity for a profitable sale.
I coach business coaches to help their clients avoid the following 3 obstacles to achieving a successful business sale:
- Emotional attachment
- A never-ending focus on profit instead of value
The following case study of business coach training with my client will provide some guidance on how to focus your client on value (not just profits) to ready their business for sale.
The Business Coaching Tools and Techniques That Made The Difference
When I was conducting my initial complimentary strategic growth session with my prospect (we’ll call him John), he asked me to comment on his exit strategy. It was obvious that his business was very profitable and had already been valued at a sales price of £750,000. John could see no reason why he couldn’t achieve a higher figure. His target sales price was £1.2 million. However, the fact that 95% of the business activity revolved directly around John presented a problem — the business had far less value without John.
To win the business coaching sale, I confidently provided John a guarantee that through my business coach training he would achieve in excess of a £1.2 million valuation. We set to work adding value to his business. Most importantly, we immediately got on with relieving him of the majority of his daily business activities. Over an 18-month period, we worked on the following Coaches’ Coach “Silver Bullets” (business optimization tactics) to ensure we achieved the highest possible sale price in the shortest amount of time. You can learn more about the Silver Bullets HERE. This is a summary of the Silver Bullets we used to add value to his company and ready it for sale:
Current Business Plan: We clarified the vision and the business plan to make them laser-focused and ready to communicate to everyone associated in any way with the business.
Operations & Training Manual: We conducted a full audit of the time, systems, and processes (there were none) and began to document them. A major focus of this effort was on the activities consuming John’s time. We delegated John’s tasks to others and empowered them to complete those tasks during a four-week holiday during which John had no contact with the team whatsoever. We got the business team to examine current processes and develop ‘How To Manuals’ for each.
Comprehensive Exit Strategy: We formulated an exit plan and agreed on the details concerning who within the business needed to know about it. We created and distributed a nondisclosure agreement to all those involved in and outside the business. We create an “exit team,” defined the criteria each team member should meet, interviewed and selected those who best matched the criteria. We prepared sales literature and a new minimum sales valuation targeted to a selection of potential vetted buyers.
The Value of Business Coach Training
Implementing the Coaches’ Coach “Silver Bullets” outlined above added significant value to the business in the following ways:
- The business no longer depended on any one individual. The business could sustain profitability and growth even in the absence of a key employee or the loss of a key customer.
- A culture of success and fun was established! Every team member, no matter the position, knew and understood the business vision, values, and purpose, and in turn became passionate about its success.
- The business was systematized. All the tasks could be easily done by a subsequent owner if a team member left.
- During an 18month period, net profits grew by a factor of 5X and cash increased by a factor of 3X. As a result, they were able to invest in new business assets that were required to sustain growth.
- Potential buyers could clearly see the value. The work we did generated incremental profit and growth that were sustainable and offered potential for continued improvement.
After less than 2 years, a new valuation came in from two sources, one from the exit team itself and another from an independent business valuation firm.
The business received a staggering £5 million valuation — a net increase of £4.25 million!
The Amazing Value of Business Coach Training
During the course of our business coach consulting engagement, John often struggled with emotions. As is often the case when coaching clients, entrepreneurial pride, fear, frustration, a real attachment and a ‘love’ of the business made it difficult for him to let go. However, as he began experiencing even greater success and progressing toward the realization of his dream the process became easier.
John could have sold his business to a real buyer with an actual offer on the table of £5.1 million. Rather than sell, however, he chose to retain the business and to enjoy it’s potential. He saw future success as his team had gathered fully behind him and his vision. He even chose to give (yes give!) some shares of his business to key team members and to sell some shares to others.
Since then, over the last 12 months, the business reached even greater heights. It now generates more than £1 million net profit per year and is projected to enjoy continued year over year growth. The value of the business now exceeds £10 million.
With a great team of managers and leaders in place, John can spend more quality time with his family. He is truly living his dream now that he has achieved the freedom of choice. And he is enabling each of his team members, from the apprentice/trainee to the senior managers, to do likewise.
As a business coach, I believe that every entrepreneur should have the freedom of choice in their lives and business. In fact, the Coaches’ Coach 5 Steps to Freedom business coaching system revolves around the premise that there is a predictable path from Creation to Freedom that every business owner can follow. To learn more about this system, click HERE.
I often think about this… Without the benefits and guidance of business coach training, John may have sold his business based on profit alone, without focusing on sustainable value. Had he done so, where do you think he would be now? What would he have missed out on and what choices would he have lost? Ask yourself how you can achieve freedom in your own business and enable your clients to do so too. There are few achievements greater than these.
P.S. As a business coach coach, I’m committed to helping you be all you can be in your business and personal life. I urge you to grab a copy of the FREE ebook: Secrets of a Business Coaching Rockstar. You can get it HERE.