Buying & Selling a Business In Tucson Blog

If Your Business Won't Run Without You It May Not Be Sellable

As we have discussed in numerous places across this site and blog, and would certainly cover with you in person were you to consult with us about selling your Tucson business, one of the most crucial determinants of whether your business can actually be sold is the extent to which it can be run without you.

Many businesses, by their very nature, depend on the skills, relationships, and personality that the business owner has developed over time in their business community.  This is particularly true in professional services businesses, or hospitality related businesses where the owner is the namesake and public face of the business.  When starting a business, there is great utility in building it around yourself and your name, and perhaps more than a little ego gratification.  Even if the business is not named after you, many business owners enjoy the feeling of being indispensable and derive satisfaction from being involved in most every decision made within their business, from large to small.  Let's face it, that's part of the personality type of the typical entrepreneur. 

If you ever plan to sell your business in Tucson, however, it pays to start planning ahead, and changing your attitude toward business ownership and your role within your business.  In larger corporations and organizations, you'll often hear the expression "you've done a good job when you've put yourself out of a job."  That's pretty clear; part of doing your job is doing it so well that there is no longer a need for you in it and the next guy can take over and focus on different things.   The same way of thinking should be adopted by Tucson small business owners for whom selling their business is part of their future financial or retirement planning.  Why? Because unless someone else can buy your business and be assured that it can keep running on all cylinders without you, from day one,

Business owner, and investor John Warrilow is also the author of a book called "Built to Sell" that we highly recommend to anyone considering selling a business in Tucson.  Warrilow describes in the book his personal experience of trying to selling a services business, only to find that it could not be sold because he was too central to its operation.  He conducted surveys of business owners and business brokers across the country, which included the question ”How would your business perform if you were out of action for 3 months and unable to work?"

The chart below summarizes the responses of those surveyed, and demonstrates that " the most valuable businesses could better handle an extended absence of the owner."

 

 

 

 

 

 

That's exactly the point: your business will be worth more to a buyer if it can demonstrably run without you at the time you put it up for sale.   That means you need to develop talent, a manager, or staff, and teach them and delegate to them so that they learn to perform the most important functions.

So, which is the right person within your organization to entrust this responsibility to? How far should you go?  Should you entrust portions of responsibility to different managers in different functional areas of the company?  Or, should you make the effort to invest in a single manager, someone who you train and empower to fully take the reins in your absence?

Warrilow's research shows that business owners and business brokers alike agree that if you plan to sell your business developing a strong manager is your best bet.

While this study is by no means exhaustive, we think it represents the facts accurately and agree with its conclusions.  If you want to sell your Tucson business, you need to be able to convince a buyer it can run without YOU. 

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