In this episode of the Invest in You podcast, host Fredrik is joined by guest Rob Goddard, a business advisor and expert in selling companies. They discuss the importance of preparing a business for sale and the key factors that can make or break a deal. Rob talks about the need for business owners to make themselves redundant and build a strong team to ensure the business is not reliant on their day-to-day involvement. He also highlights the significance of having robust financial reporting and a clear growth plan to attract potential buyers. Rob shares valuable insights on the common mistakes business owners make when selling their companies and offers practical advice on how to navigate the process successfully. 

KEY TAKEAWAYS

• The importance of determining a "magic number" when selling a business: The "magic number" refers to the capital sum needed from the sale of the business to start a new chapter in the owner's life. It is not necessarily the value of the business, but rather the amount required to sustain their desired lifestyle.
• Making the business owner redundant: To make a business saleable, the owner needs to build a succession plan and surround themselves with a capable team. This ensures that the business is not reliant on the owner's day-to-day involvement and increases its transferability to a new entity.
• The significance of financial reporting: Having up-to-date and robust financial reporting, including monthly management accounts, is crucial when selling a business. It provides potential buyers with a clear understanding of the business's financial performance and future prospects.
• The need for a growth plan: Many business owners lack a clear growth plan for their business. Having a well-defined growth plan, supported by reliable sales forecasts and a narrative that substantiates the numbers, can significantly increase the value of the business and attract potential buyers.
• The challenges of owner reliance: Businesses heavily reliant on the owner's involvement can be difficult to sell. Buyers typically expect a ready-made management team in place, and if the owner is the sales director or at the centre of everything, it can hinder the sale process. Making the owner redundant and building a capable team is essential for a successful business sale.

BEST MOMENTS

"I think it's the, I like educating business owners because most business owners have never sold before." 

"So I've already seen their accounts by that point. So I give them a really low ball offer, right? I'll say, if I think it's probably worth 3 million, I'll say, do you know what? I think it's worth one and a half. Would you accept that today?" 

"I want them to make themselves redundant and, and the business isn't reliant on their day to day input, expertise, knowledge, contacts." 

"If you can show a reliable sales forecast based on real customers and how you retain people, all of a sudden now you can multiply the value quite easily."

ABOUT THE HOSTS

Serial entrepreneurs Fredrik, Charlie and Ivan Sandvall love sharing ideas and interviewing world-class entrepreneurs and influences. Invest In You is about investments, entrepreneurs, personal development and doing fun things. They hope to ensure you to take action, helping others and yourself, plus enjoying the journey we call life.

CONTACT METHOD

Fredrik Sandvall

www.linkedin.com/in/sandvall/

https://www.facebook.com/FredrikinLondon/

Charlie Sandvall 

LI: https://www.linkedin.com/in/csandvall/

Youtube Channel: https://youtube.com/c/Sandvall

Ivan Sandvall

Instagram @ivansandvall