Imagine finally freeing yourself from the daily grind of running your business, not with a whimper, but with a bang—leaving with both financial success and a sense of fulfillment. That’s the power of a strategic business exit, and we’re about to dive into the world of buy-sell transactions with insights from John Martinka, “The Escape Artist,” of Nokomis Advisory Services, a seasoned expert in mergers and acquisitions. With almost 30 years of experience in the M&A arena, John has helped countless business owners navigate the complexities of selling their companies for maximum value and personal fulfillment. He is the author of “Exit With Style, Grace, and More Money” and other books. His experience and advice, gleaned from a conversation on the Angel’s, Exits, and Acquisitions podcast, is a treasure trove for anyone thinking about selling their business now, or in the future.
👇 Check out the full podcast episode with John Martinka on Angel’s Exits and Acquisitions below. 👇
Is Your Business Really Your Baby?
Many business owners, especially founders, treat their businesses like their children. They’ve poured their heart and soul into it, making it difficult to consider letting go. But, if you’re holding on too tight, it can actually hinder your ability to exit successfully. It’s time to ask yourself: are you truly ready to leave? It’s not just about the money; it’s about your mindset. It’s about recognizing that your business is an entity separate from you, and that you have to be personally ready to leave it.
The Mindset Shift: Preparing Yourself for Exit
Selling a business isn’t just a financial transaction; it’s an emotional one. Before you even think about the process of selling, you need to address your personal readiness. Have you talked to a financial advisor? It’s crucial to understand how the money from the sale will replace your current income. What will you do after the sale? Having a plan beyond your business is key to a smooth transition. Don’t fall into the “celery morse” trap of feeling lost once your business is gone.
Ask yourself:
- Have I spoken with a financial advisor?
- What will my life look like after I sell?
- Is my spouse truly ready for me to be around all the time?
Stop Being the Bottleneck!
One of the biggest barriers to a successful exit is owner dependency. Are you the one making all the decisions, handling all the critical tasks? If so, your business has an “owner dependency” problem. This can be a major turn-off for potential buyers. If you are the bottleneck, your business’s value is dramatically reduced. The solution? Delegation. Start trusting your team and empowering them to handle responsibilities.
The Delegation Game Plan
Delegation isn’t just about offloading tasks; it’s about building a resilient business. You might think that no one can do it as well as you, but that’s not true. People may stumble but you are there as the safety net. Give your people the opportunity to step up, and you may be surprised at what they can achieve.
Keys to effective delegation:
- Start small and gradually increase responsibilities.
- Provide clear expectations and resources.
- Offer support and guidance, but don’t micromanage.
- Realize people will stumble a little bit but will learn from it.
- Train your people to delegate too.
The Importance of Accurate Financials
Many business owners overlook the crucial role of their accounting department, which could be called the “Cinderella effect”. This is a big mistake! Inaccurate financial statements can destroy the trust potential buyers may have in your business. You have to make sure your financial systems are up to par. Clean, clear, and reliable financial records are crucial to any business sale. Do you have balance sheet items showing up on the income statement? If so, that’s a huge red flag.
- Customer concentration: Are a few big clients making up most of your revenue? This makes your business risky for buyers.
- Supplier concentration: Are you too reliant on one supplier? A new owner may not have the same relationship with that supplier.
- Landlord dependency: Do you have a secure long-term lease
- Key employee dependency: What happens if a crucial employee gets hit by a “Pepsi truck?” Do you have a secure long-term lease?
Protecting Your Intellectual Property
Many business owners overlook the crucial role of their accounting department, which could be called the “Cinderella effect”. This is a big mistake! Inaccurate financial statements can destroy the trust potential buyers may have in your business. You have to make sure your financial systems are up to par. Clean, clear, and reliable financial records are crucial to any business sale. Do you have balance sheet items showing up on the income statement? If so, that’s a huge red flag.
The Growth Imperative
Many business owners get comfortable with their current situation and stop trying to grow. A lack of growth is a major red flag to potential buyers. Buyers may think that you have tried every way to grow but the business has simply stalled. Don’t rest on your laurels. Continuous growth shows a business’s potential. Growth hides a lot of operational problems, allowing you to correct them over time.
Hiring and Retaining the Best
Your people are your greatest asset. A crucial element of a valuable business is the ability to hire and retain great people. The employment market is tough, so focus on creating an environment where talent wants to stay.
- Remember the principle: Hire for values, train for skills. Bring in individuals who align with your company culture and are eager to learn.
The "Three I's": IP, IT, and Incentives
Let’s recap some of what we’ve touched on so far:
- Intellectual Property (IP): Have it, protect it, and demonstrate its value.
- Information Technology (IT): Use technology to its full potential, and don’t forget about cybersecurity.
- Incentives: Create compensation plans that motivate your team to achieve big results.
Beyond the Paycheck: What Truly Matters
While making money is important, many sellers care about more than just the financial outcome. Legacy, not just money, is a primary consideration for most business owners. They want to ensure their people are taken care of. They want to see their company’s name live on. They want their values to be upheld. A buyer who aligns with your values may be more important than the highest offer.
The Art of Exiting with Style and Grace
Selling your business is not just about the final transaction; it’s about the entire process. It’s about navigating the complexities of business ownership and ultimately achieving personal freedom with the best outcome for all stakeholders. You want an exit that is both financially and emotionally rewarding. This requires strategic planning, a focus on value creation, and a commitment to building a business that is truly worth buying.
Build Your Business to Sell, Not Just to Run
Don’t just build a business for income; build it to create value. When you build your business with the end in mind, you can maximize your profit, help your team, and make a bigger contribution to the local economy. By building a sellable business you provide value not only to your customers, but also to your employees, vendors, shareholders, family, and your local economy. By creating a company that you can sell for a premium you can enjoy the pride of ownership that comes with building the right way.
Conclusion and Next Steps
Selling your business is a big move, and getting it right is crucial. By implementing the strategies discussed in this blog, you can dramatically increase your business value and create a smooth, successful exit. But the journey doesn’t end here. To dive deeper into the topics and strategies discussed, we highly recommend you check out the full podcast episode with John Martinka of Nokomis Advisory Services on Angel’s Exits and Acquisitions.
Prefer to listen? Dive into the full podcast on Spotify or play the audio below!
Resources for Your Business Exit Journey
Are you ready to take control of your business future? Here are some resources to help you along the way.
- Angel Investors Network Membership: Join our private network for exclusive investment opportunities and access to fellow investors, educational resources, and live events. This network will allow you to connect with like-minded individuals who can support you on your journey to exiting your business.
https://angelinvestorsnetwork.com/membership - Angel Investors Network Events: Attend in-person seminars focused on capital raising and business growth, specifically designed for business owners, investors, and capital raisers.
https://angelinvestorsnetwork.com/events - Capital Readiness Quiz: Evaluate your business’s preparedness for raising capital and identify areas for improvement.
https://angelinvestor.scoreapp.com - Angel Investing Fit Quiz: Find out if angel investing is the right next step for you.
https://angelinvestors.scoreapp.com - Angel Investors Network Marketplace: Explore a wide range of investment opportunities in promising startups and ventures.
https://invest.angelinvestorsnetwork.com/marketplace - Angel Investors Network YouTube Channel: Watch our videos covering business, investment, and capital-raising strategies.
https://www.youtube.com/@angelinvestorsnetwork
These resources provide a complete package to help you grow, improve, and ultimately prepare your business for a successful and fulfilling exit.
