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How To PREPARE a Business For Sale

Tue, 21 Apr 2026 12:57:10 GMT

How To Prepare A Business For SALE

How to Prepare YOUR Business for Sale:

Simple summary, Start With Value , Not Valuation - and it's as simple as that.

“What’s my business worth?” It’s usually the first question every owner asks when they start thinking about selling. It’s also usually the wrong one.

Because valuation is not the first step in business exit planning, VALUE is, and there’s a huge difference.

Valuation is the number someone puts on your business today. Value is what makes a buyer actually want it tomorrow.

Too many owners rush straight to market asking brokers for a price before they have stopped to ask the real question…

Do I even have a business that someone wants to buy?

That mistake is expensive, and it’s easily done because every business owner THINKS they have built something of immense value. You’ll need an independent third party to answer that question for you, not a business broker that will be asking for an upfront fee.

Bringing a business to market too early is like putting your house up for sale with a leaking roof, cracked walls, and no front door. Yes, technically it is for sale, but nobody serious is paying top money for it. Worse still, once the market sees it sitting there unsold, people start asking what is wrong with it. That damage is irreparable.

The same happens with businesses. It’s why 80% of businesses listed for sale NEVER sell, and that’s avoidable.

A tired business with poor systems, owner dependency, messy accounts, weak margins, customer concentration problems, and no clear structure does not attract strong buyers. That structure of business attracts bargain hunters, and bargain hunters do not pay life-changing money.

This is why preparation matters more than valuation.

A buyer is not purchasing your stress, your chaos, or your 70-hour working week. They are buying profit, predictability, transferable ownership, and confidence. They want a business that works without needing you chained to it every day.

If your business cannot survive without you, you do not own a sellable business. You own a job, and no buyer is going to buy a job. That is the brutal truth most people avoid or won’t admit.

Exit planning should not start when you decide to sell. It should start years before. It’s never too early to start exit planning, but it can be too late.

The owners who achieve the best valuations are not the ones who wake up one morning and decide they are done. They are the ones who spent time reducing risk, building systems, improving profitability, diversifying customers, strengthening teams, and making the business transferable.

They built value first, then valuation followed.

The good news is getting started is simple.

Before you ask what your business is worth, find out how ready it actually is. We call this the Business Exit Readiness Score . It’s FREE and will give you an indication on how prepared your business is for sale. Start it right here .

This shows you the good, the bad, and the ugly. It highlights where value is being built, where it is leaking away, and what needs fixing before you ever think about going to market.

Because selling well is not about luck, it is about preparation, and the difference between an average exit and a great one is usually decided years before the For Sale sign ever goes up.

Do not start with valuation, start with VALUE.

Because the market does not reward hope, it rewards preparation. Get your Business Exit READINESS Score now .

How To Increase The Value Of Your Business BEFORE You Sell

Mon, 02 Mar 2026 16:14:11 GMT

How to Increase the Value of Your Business Before You Sell

How to Increase the Value of Your Business Before You Sell

If you are a small business owner, there is a strong chance you have asked yourself at some point, “ How do I increase business value of my business ?”

The honest answer is this: you do not increase the value of your business by working longer hours, answering emails at midnight, or becoming even more indispensable. In fact, the more your business depends on you, the less attractive it becomes to a serious buyer. If you want to improve business valuation properly, you need to focus on business value drivers that create profit, predictability and independence from you.

Value is not about vanity turnover . It is about sustainable earnings, transferable systems and manageable risk. If you want to increase EBITDA, improve profit margins and reduce owner dependency, you need deliberate value building strategies, not exhaustion.

Below are twenty practical, and realistic ways small businesses can increase the value of their company before the sale, without adding loads of extra hours onto your week.

First, focus on improving profit margins rather than chasing revenue. A 5% price increase often drops almost entirely to the bottom line, dramatically increasing EBITDA without adding more work. Many UK small businesses are underpriced and overworked.

Second, remove low-margin customers who consume disproportionate time and energy. A tighter, more profitable client base is far more attractive than a chaotic book full of “busy but skint.”

Third, introduce structured pricing models such as Good, Better, Best options so that customers self-select higher value packages, lifting average order value and improving margins naturally.

Fourth, build recurring revenue wherever possible. Maintenance contracts, retainers, subscriptions or repeat order agreements increase predictability, which is a core business value driver.

Fifth, reduce customer concentration . If 40% of your turnover comes from one client, a buyer sees risk. Diversifying revenue streams directly improves business valuation.

Sixth, document your systems and processes so the business runs on procedure rather than personality. Buyers pay more for transferable systems than heroic founders.

Seventh, strengthen your second tier of management so the business can operate profitably without your daily involvement. Reducing owner dependency is one of the most powerful ways to increase business value.

Eighth, improve financial reporting . Clean management accounts, clear KPIs and accurate forecasting increase buyer confidence and often justify stronger multiples.

Ninth, track and improve gross margin by product or service line so you double down on what actually creates profit rather than what simply creates activity.

Tenth, tighten debtor control and improve cash flow management, because strong cash conversion reduces perceived risk and improves valuation metrics.

Eleventh, invest in brand positioning and differentiation so you are not competing purely on price. A strong brand with clear market positioning supports premium pricing and better margins.

Twelfth, strengthen online presence and lead generation systems to create predictable inbound enquiries rather than relying on referrals and luck.

Thirteenth, formalise supplier agreements to reduce operational risk and lock in margin stability. Buyers value security of supply.

Fourteenth, create a clear growth plan supported by evidence of past execution, demonstrating scalable opportunity rather than theoretical potential. We call this the “Growth Curve” and it’s an essential part of exit planning.

Fifteenth, eliminate unnecessary overhead and streamline operations so your cost base is efficient and EBITDA reflects disciplined management.

Sixteenth, invest in staff development so skills are embedded within the business rather than trapped in your head.

Seventeenth, build strategic partnerships that widen your reach without increasing fixed costs, creating growth without dramatically increasing workload.

Eighteenth, review and optimise tax efficiency and corporate structure to ensure the business is clean and transaction-ready. It also makes sure there’s no financial skeletons in the cupboard.

Nineteenth, protect intellectual property , trademarks, processes or proprietary methods that create defensible advantage.

Twentieth, conduct regular internal “buyer perspective” reviews , asking what would worry a serious acquirer and addressing those risks before they become negotiation leverage. We can help with this as often features a seller thinks are business advantages can actually put a serious buyer off.

Each of these value building strategies contributes to stronger earnings, lower risk and greater transferability. When EBITDA increases and risk decreases, valuation multiples tend to improve. That is how you genuinely increase business value UK markets will pay for, without sacrificing your health or your family life.

The reality is that improving business valuation is rarely about one dramatic change. It is about consistent, focused improvement of the core drivers of value: profit, predictability, systems, team and strategic position. When you improve profit margins, increase EBITDA and reduce owner dependency, you are not only building a sellable asset, you are building a better business to own in the meantime. That’s a win-win for every business owner.

Most small business owners leave this too late. They think about exit a year before they want out, when the real work should have started five years earlier. The good news is that even twelve focused months of disciplined action can materially shift value if you concentrate on the right drivers.

If you are serious about increasing your company’s value, the first step is understanding where you stand today. We can provide a business valuation and valuation SUMMARY that highlights the areas that will add value for your business.

I am offering a free, no-obligation business valuation and value report specifically designed for UK small business owners. This report highlights your current estimated value, identifies your biggest risk areas, and outlines practical steps to improve business valuation using proven business value drivers.

Do not guess what your business is worth. Do not assume it will sell. And do not wait until you are exhausted to find out you built a job rather than an asset.

Start with clarity. Get your free valuation and value report today, and take control of the value you are building. Start that ball rolling here , today, NOW. Get a FREE Express Instant Business Valuation here .

How Do Earn Outs Work? What's The Risk?

Tue, 24 Feb 2026 08:50:46 GMT

How Do Earn Outs Work?

How Do Earn-Outs Work? What The Risks With Earn-Outs?

Earn-Outs Explained: The Bit of the Deal That Can Make or Break Your Exit

If you’re selling your business, you probably have one number in your head, the price .

Let’s say someone offers you £1 million. Brilliant bring out the Champagne, and prepare for your next chapter.

Oh, hold on a minute, did someone say “Earn-Out”?… it’s not £1 million.

It’s £600,000 now. And £400,000 “subject to performance over the next three years”.

Welcome to the world of the earn-out. For small business owners, earn-outs can either bridge the gap between buyer and seller… or quietly blow up what looked like a great deal.

Let’s strip this right back to plain English.

What Is an Earn-Out?

An earn-out is a portion of the sale price that is paid later, based on future performance.

In simple terms:

You don’t get all your money on day one. You have to “earn” part of it after you’ve sold.

Usually, the future payment depends on things like:

• Turnover targets.

• Profit targets.

• Customer retention.

• Hitting certain growth milestones.

So instead of £1m upfront, it becomes more like £600k now, plus up to £400k if the business hits agreed targets over the next 2–3 years. That “if” is doing a lot of heavy lifting.

You also need to keep in mind that your “Earn-Out” is based on performance conditions that you are not in control of.

How Earn-Outs Actually Work

Here’s how it typically plays out:

1. You agree a headline price.

2. Part is paid at completion.

3. The rest is linked to performance over a defined period.

4. You usually stay involved in the business during that time. However, the new buyer will almost certainly have final / overall control.

For small businesses, this often means:

• You’re still running it.

• You’re now reporting to the new owner.

• You no longer fully control the business. IT’S VITAL TO BE CRYSTAL CLEAR ON THIS

• Your final payout depends on decisions that may not be entirely yours.

That’s where things get interesting.

Why Buyers Use Earn-Outs

Buyers aren’t evil masterminds. They use earn-outs for practical reasons.

1. To Reduce Risk

If your business relies heavily on you, key customers, or a few big contracts, the buyer is nervous. An earn-out protects them if performance drops after you leave.

2. To Bridge a Valuation Gap

You think it’s worth £1m. They think it’s worth £750k. An earn-out says, “Fine. If it performs like you say it will, you’ll get your number.” It’s NOT unreasonable thinking to be honest.

3. To Keep You Committed

If you’re staying on, an earn-out aligns incentives. You’re motivated to keep driving performance.

4. To Manage Cashflow

Not every buyer has a suitcase of cash. Spreading payments reduces upfront funding needs.

In theory, it’s fair. In reality? It can be VERY dangerous.

10 Areas of Extreme Danger for Sellers

This is where small business owners get caught out.

1. You Lose Control

You no longer own the business, but your money depends on it performing. If the buyer changes strategy, pricing, staffing or marketing… and performance drops? That’s on your earn-out.

2. Targets That Look Achievable (But Aren’t)

On paper, they feel realistic. In practice, market changes, economic shifts, or internal disruption can make them tough.

3. Accounting Manipulation

Profit-based earn-outs are especially risky. Overheads can be reallocated. Costs can be loaded into your division. Profit can disappear without turnover changing.

4. Culture Clash

If the new owner changes systems, removes staff, or disrupts customer relationships, performance can suffer. You’re judged on results, but not in full control of delivery.

5. Dependency on Other Divisions

If your earn-out depends on support from the buyer’s wider business (sales team, marketing, finance), and they underperform, you still lose.

6. Unrealistic Growth Assumptions

Buyers often build in “expected synergies”. If those don’t materialise, targets can be missed.

7. Short Earn-Out Periods

A 12-month earn-out tied to aggressive growth? That’s a sprint in a marathon game. This is one to seriously watch out for.

8. Vague Definitions

“EBITDA” sounds clear. It often isn’t. What adjustments? Whose costs? What structure? Small wording differences can cost six figures. This needs professional, legal advice, NOT ChatGPT and a mate down the pub.

9. You Become an Employee

You’re now reporting to someone who can effectively influence whether you get paid. That’s an uncomfortable power shift.

10. You’re Emotionally Invested

If you’ve spent 20 years building it, staying on while someone else “owns” it can be draining. And when you’re drained, performance drops.

10 Situations Where Earn-Outs Can Work

Now, earn-outs aren’t automatically bad, you just need to be AWARE. In the right structure, they can be powerful.

1. The Business Is Strongly Growing

If you’re confident performance will increase, an earn-out can push total value higher than a straight cash deal.

2. You Want to Stay Involved

If you’re not ready to walk away, an earn-out can reward continued effort.

3. Clear, Revenue-Based Targets

Revenue is harder to manipulate than profit. Cleaner metrics reduce risk.

4. You Retain Operational Control

If you’re still effectively running your part of the business independently, risk reduces.

5. The Buyer Has a Track Record

Experienced acquirers with a reputation to protect are generally safer partners.

6. Strong Legal Drafting

Clear definitions. Clear calculation methods. Clear dispute resolution clauses. This is not the place to cut legal fees.

7. You Understand the Numbers

If you know exactly how the targets are calculated and stress-test them, surprises reduce.

8. The Buyer Brings Genuine Growth Capability

If they genuinely add distribution, capital, or systems that improve performance, an earn-out can be upside, not risk. Nice one when that’s the case.

9. Realistic Timeframes

Two to three years is more stable than one frantic year.

10. You’ve Already De-Risked the Business

Low owner dependency. Strong systems. Recurring revenue. Stable management team. The less fragile the business, the safer the earn-out.

Why This Matters for Small Business Owners

Here’s the uncomfortable truth.

Most small businesses are:

• Owner-dependent.

• Relationship-driven.

• System-light.

• Financially inconsistent.

That makes earn-outs riskier. We’re just being 100% honest here . Those four areas is where risk hides.

If your business falls apart when you step back, a buyer will either:

1. Insist on an earn-out, or

2. Reduce the upfront price significantly.

The real protection against a dangerous earn-out isn’t negotiation, it’s preparation.

Build a business that:

• Doesn’t rely entirely on you

• Has recurring revenue

• Has documented systems

• Has stable management

• Has predictable financial performance

When your business is robust, you gain leverage, and leverage is what determines whether an earn-out becomes a weapon against you or an opportunity.

Final Thought

An earn-out isn’t good or bad, it’s a tool, and you need to decide if that tool is right for you. DO NOT try to hammer a nail with a screwdriver…

In small business sales, it’s often the most misunderstood part of the deal.

Before you celebrate the headline price, ask:

• How much is guaranteed?

• What do I actually control?

• What has to happen for me to get paid?

• What could go wrong?

Because in business sales, the money you don’t receive hurts far more than the money you never expected.

The only thing worse than selling your business is thinking you’ve sold it, and then having to earn it all over again. That’s the ULTIMATE NIGHTMARE.

Once you're in an agreed "Earn-Out" it's usually legal binding, it can't be unwound or changed easily, if at all. This is why professional, legal advice from an M&A experienced solicitor is vital. Yes, that may be costly, but not as costly as getting it wrong.

Would you like to have a chat about Earn-Outs or Business Exit Planning? Let's have an initial chat here , always happy to help and guide.

Can You Sell A Business That’s Losing Money

Wed, 18 Feb 2026 13:13:33 GMT

Can You Sell a Business That’s Losing Money?

It's a VERY common question and the simple answer is Yes; you can sell a business that is not making money or even losing money.

Businesses are bought and sold for various reasons, and profitability is just one factor that potential buyers consider. However, selling a business that is losing money will be more challenging compared to selling a profitable one, so expectations need to be managed.

Before we dive into the detail, there’s one question you must ask yourself. “ Why is my business not making money?”

The answer to that question very much depends on what happens next. Let’s say your £1m business is busy, there’s tons of work getting done, and hundreds of active, loyal customers. The business is not making money because it’s chaotic, poorly structured, and has a cost base of expenses that are sucking every pound of net profit.

Your loss making £1m business could, in effect, be £1m of very profitable and desirable turnover to a well organised competitor, especially if it’s an asset sale.

Let’s Get Started

Here are a few things to keep in mind if you're considering selling an unprofitable or loss making business:

1. Value Proposition: Highlight other assets or potential that the business may have beyond current financials. This could include a strong customer base, valuable intellectual property, strategic location, or unique products/services.

2. Documentation: Ensure you have clear and comprehensive documentation of the business's financials, operations, and any other relevant information that would be useful to potential buyers. If the business is loss making for legitimate reasons such as health, these MUST be documented and explained in DETAIL.

3. Reasons for Poor Performance: Be transparent about why the business is not profitable. Potential buyers will want to know the reasons behind the financial struggles and assess whether they can turn the business around. What may have been unprofitable activity for you may not be unprofitable for a new owner. We can cover this in GREAT detail with you.

4. Marketing and Promotion: Emphasise any marketing strategies or potential growth opportunities that could lead to profitability in the future.

5. Negotiation: Be prepared for negotiation, as potential buyers may offer lower prices due to the business's financial position. That includes taking advantage of a health or financial situation. Sorry, just being realistic here.

6. Expectations: It's essential to manage your expectations when selling an unprofitable business, as finding the right buyer who sees the potential in the business may take time. Additionally, consider the legal and financial implications of selling, such as outstanding debts or contracts.

7. Sell The Dream: If your reason for selling and exiting is simply down to burnout or lack of ambition to progress, sell the dream of possibilities to a new, exciting and ambitious owner. This is a huge factor when exiting a business and something Junction 20 explores in great detail.

Remember that every business situation is unique, and the outcome will depend on factors like market conditions, the industry you're in, and the overall economic climate.

What else could a potential buyer be interested in?

Potential buyers may be interested in various aspects of a business beyond its profitability. Here are some other factors that can attract buyers:

1. Growth Potential: Buyers may see potential for growth and expansion in the business, even if it's not currently profitable. They may have resources, expertise, or access to markets that could turn the business around.

2. Strategic Fit: The business might fit well with the buyer's existing operations or complement their product/service offerings. In such cases, the buyer may be willing to acquire the business to gain a competitive advantage.

3. Customer Base: A loyal and engaged customer base can be valuable to potential buyers. It indicates that there is demand for the product/service and that the business has built a positive reputation.

4. Intellectual Property: If the business holds patents, trademarks, copyrights, or other intellectual property rights, it could be attractive to buyers who want to acquire those assets.

5. Skilled Workforce: A well-trained and experienced workforce can be valuable, especially if the buyer operates in the same industry or region.

6. Location: A business's location can play a crucial role in its attractiveness to buyers, especially if it provides access to a particular market or has a strategic advantage.

7. Assets and Equipment: Tangible assets, machinery, equipment, and inventory can have significant value to a buyer, especially if they can be utilised for other purposes.

8. Supplier and Vendor Relationships: Established relationships with reliable suppliers and vendors can be beneficial to a buyer, reducing the transition challenges.

9. Brand and Reputation: A strong brand and positive reputation in the market can be appealing to buyers looking to enter or expand in a specific industry.

10. Patience for Turnaround: Some buyers might be willing to invest in an unprofitable business if they believe they can turn it around in the long term.

11. Synergies and Cost Savings: If the buyer can achieve cost synergies or operational efficiencies by integrating the acquired business into their existing operations, it may justify the purchase.

12. Diversification: Buying an unprofitable business in a different industry might provide diversification benefits to the buyer's existing portfolio.

13. Contracts and Accounts: Specific contracts and specific corporate accounts may be of value to a prospective buyer. Transfer of those contracts needs to be considered.

14. Recurring Revenue: A business that has recurring revenue through subscriptions and memberships can prove to be VERY attractive to a potential buyer.

Remember that each buyer's interests and motivations can vary widely, and some buyers might consider a combination of the above factors. It's essential to tailor your approach when marketing an unprofitable business to highlight its unique strengths and potential opportunities to attract the right buyer.

What’s NEXT?

There’s a few things we need to look at first. Start with getting a Valuation of your business based on the current or most recent accounts. You can get an instant “Express Valuation” here .

However, in light of the complexities with a loss making business we would advise getting the FULL Valuation done. As you would expect, there’s a lot more information required. Start that ball rolling here .

Once you have completed the FULL Valuation, book a call with us, it lasts around one hour*. That allows us to share the full valuation report and discuss how to improve your exit value.

*Please note this is only available to business owners who have completed the FULL Valuation.

Have a chat with us, there's no obligation and it's 100% Confidential. Contact us here , it's good to talk.

Maximising the RETURN of your LIFE investment is what we're all about.

What Buyers Look For When Buying A Small Business

Thu, 12 Feb 2026 08:14:18 GMT

What Buyers Look For When Buying A Small Business

The Buyer’s Checklist: What Buyers Look for in a £200k–£2m Turnover Business

If you spend any time in rooms with people who buy businesses, a funny thing happens. Owners talk about passion and don’t realise that BUYERS talk about risk. The two are at odds with each other.

Owners talk about potential, buyers talk about proof. Owners talk about how hard they’ve worked, buyers talk about whether it will still work when you’re on a beach somewhere warm with patchy Wi-Fi.

Do see you see where we’re going with this?

And in the £200k to £2m acquisition range, that difference in perspective is brutal.

Because at this level, buyers are not dreamers. They are more than likely trade acquirers, or experienced operators. They have usually been burned before. They have spreadsheets where optimism goes to die.

If you are thinking about selling your business, or even vaguely hoping you might one day, you need to understand how they see you.

This is the buyer’s checklist, and you need to know this stuff. You also need to know the “Top 20 Things You THINK Are Awesome”. These are the elements of business you THINK are great, and they’re actually not. Give us a shout, we’ll give that for free. Give me a shout here .

The meeting that changes everything

Picture this. You’ve built a decent company. Turnover is healthy, there’s profit in there somewhere, and your accountant says it’s worth good money. Your mate in the pub says you should ask for a million quid, because mates down the pub are all M&A Experts.

So, you sit down with a potential buyer. They nod politely while you explain the journey, the sacrifices, the sleepless nights, the time you remortgaged the dog. Then they ask a question that lands like a brick… and they will ask this question…

“What happens if you leave?”

Suddenly the atmosphere drains out of the room, because this is what sits at the centre of almost every business valuation in this value bracket. Not growth, not brand, not the logo your nephew designed. It’s all about one thing in the eyes of the buyer, RISK.

Buyers buy income, not effort

Here’s the first hard truth you need to know. A buyer is not purchasing the blood, sweat and tears you poured into the place. That’s a job, and no one buys a job. They are buying future maintainable profit, PREDICTABLE profit, not guesswork.

They want predictable cash flow. They want visibility. They want to sleep at night knowing the wheels won’t fall off the moment the ownership changes.

If profits wobble every time you take a week off, you don’t have a saleable business.

You have a job with staff, yes, that’s blunt, but it’s HONEST, and we don’t do bullshit here.

The owner dependency problem

Let me tell you about a deal that “nearly” happened. Solid company, around £1.4m in turnover with decent margins, strong reputation, and plenty of enquiries coming in. On paper, and to outsiders looking in, this was a good business.

But during due diligence the buyer realised something uncomfortable. Every major client relationship sat with the owner, every pricing decision sat with the owner, and yep, every supplier negotiation sat with the owner. Can you see the problem here?

When problems exploded, guess who fixed them? Yep. The owner.

Remove that person and the machine coughed, spluttered and probably died. Now, the offer didn’t vanish, the buyer didn’t run, but the offer was revised substantially.

WHY? It’s still the same profitable business FFS. Because the buyer now had to budget for rebuilding management, transferring relationships, and surviving the inevitable client wobble. The buyer revalued to account for “risk” .

That reduction alone can be the difference between retiring well and seeing decades of work return a pittance. You have been warned, this is hard facts.

Systems are sexier than charisma

Small business owners often think buyers fall in love with energy and personality, sorry, they don’t. They fall in love with systems and processes.

They want to see how leads arrive, how they are tracked, how they convert, how delivery happens, how money is collected, and how problems are handled.

If your company runs on in your head, buyers see danger. If it runs on systems, buyers see scalability, and scalability multiplies value.

Customer concentration is a silent killer

Another example, and another near miss. A solid business, well established, great turnover, very high profits, and a loyal customer base. What the hell can be wrong there?

Problem was, one client represented 38% of revenue, yes 38%. The buyer’s face tightened. Because if that client is lost, there is no business. Worse than that, the business was operating at full capacity, therefore unable to “dilute” that concentration.

Again, the offer didn’t disappear, but it dropped, protections went in, earn-outs appeared, and suddenly the seller was being paid for the future instead of the past. Now from the owner’s perspective, it felt unfair, and it WAS, but this is the harsh reality of risk.

All this is covered in “ Go To $ell ”, the raw and honest truth about exiting your business. I hate sales pitches or blogs that are full of upsells, so if you want a copy of that Amazon Best seller, just message me…

Buyers interrogate your numbers differently

When owners discuss profit, that can often mean, “After I’ve put the car through the business, adjusted a few bits, paid myself in a creative way, and normalised the normalisations.”

You now know that buyers want clarity. They are trying to work out, “What will this business make for me after I buy it, and how quickly?”

They will strip things back, they will challenge assumptions, they will look for consistency, and they will examine trends. Financial Due Diligence can be tough, REALLY tough, and you must be prepared for it.

One messy year can be explained, COVID is a great example of this, but a “messy pattern” becomes a re-negotiation… downward.

Clean financials don’t just make accountants happy; they build confidence, and confidence improves multiples.

Growth potential is only valuable if it’s believable .

Every owner says the same thing, “We’ve barely scratched the surface.” Buyers smile, because they have heard it a thousand times.

Opportunity matter s, but only when supported by evidence: capacity, demand, marketing channels, operational strength. We call this the “Growth Curve”, and it illustrates growth potential using a detailed formula that shows facts, not fiction. If you pull figures out the air with no logical back up, expect the buyer to walk. Well, laugh, then walk.

Hope is not a strategy . If growth relies on you working even harder, it is not growth, it’s exhaustion with a marketing brochure.

The team tells a story

During acquisitions, buyers watch staff carefully. Are they confident? Do they understand their roles? Can they make decisions? Or do they keep glancing at you before answering anything remotely important?

A capable, stable team reduces transition risk. It reassures buyers that continuity exists beyond the founder. Weak management equals expensive uncertainty.

Why some businesses fly and others stall

When deals move quickly and achieve strong prices, it is rarely magic. It is usually because the owner built the company as if they would one day sell it. Every business should be built to sell, and owner doing that ensures….

They reduced dependency.

They documented how things worked.

They developed people.

They diversified revenue.

They treated financial reporting like it mattered.

By the time buyers arrived, the risk had already been lowered, and lower risk equals higher value.

The uncomfortable conclusion.. An Inconvenient Truth...

If a buyer walked into your business tomorrow and ran their quiet mental checklist, what would they see?

Would they see a company that survives you? Or would they see a company that collapses without you?

Because that answer will heavily influence whether you are looking at a premium valuation or a painful negotiation full of clauses, delays and disappointment.

Most owners leave preparing for sale far too late. It’s never too early to start exit planning, but it can be too late.

Every improvement you make to become attractive to a buyer also makes the business stronger, calmer and more profitable right now. It’s a win, win because sale ready is stress ready.

Does that help you start your planning journey?

How Does An Employee Ownership Trust Work?

Mon, 09 Feb 2026 14:58:53 GMT

How Does An Employee Ownership Trust (EOT) Work?

Employee Ownership Trusts in 2026:

The Real Pros, Cons, and Risks for UK Business Owners

Employee Ownership Trusts (EOTs) are once again a hot topic in UK business exit planning, but this time for different reasons.

The EOT conversation has fundamentally changed since November 2025. If you’re a UK business owner exploring succession, sale, or long-term continuity, it’s critical to understand what EOTs actually offer now, not what they used to.

This article cuts through the outdated hype and explains how Employee Ownership Trusts work in 2026, who they suit, and where the risks really sit, across all business sectors, not just manufacturing or professional services.

What Is an Employee Ownership Trust (EOT)?

An Employee Ownership Trust is a UK-approved structure that allows a business owner to sell a controlling stake (over 50%) of their company to a trust set up for the benefit of all employees. In a nutshell, the participating employees “own” the business.

Employees don’t buy shares personally. Instead, the trust owns the business on their behalf, with governance handled by trustees and day-to-day management remaining with the leadership team.

The 2025 EOT Tax Changes: What Business Owners Must Know

One of the biggest misconceptions still circulating online is that EOT sales are 100% CGT-free . They are not . Repeat, THEY ARE NOT .

Since 26 November 2025, qualifying EOT disposals benefit from 50% Capital Gains Tax relief, with the remaining 50% of the gain chargeable to CGT. This change significantly alters the economics of an EOT sale and means the decision must now be driven by commercial and succession logic, not tax alone.

Importantly:

The relief applies only if strict qualifying conditions are met.

Other reliefs (such as Business Asset Disposal Relief) cannot be stacked on top.

HMRC scrutiny of valuations and funding structures has increased.

Why Business Owners Still Choose Employee Ownership Trusts

Despite reduced tax relief, EOTs remain attractive for many UK business owners because they offer:

Succession certainty where no trade buyer or MBO exists.

Business continuity without selling to a competitor or private equity.

Protection for staff and culture , particularly in people-led businesses.

A phased exit , allowing founders to step back gradually.

For owners who care about legacy, independence, and long-term stability, an Employee Ownership Trust can still be the right exit route, just not the fastest or simplest one.

This is the biggest misconception that I see, business owners thinking an EOT is the simplest and fastest exit solution, they VERY rarely are.

What’s in It for Employees?.... Hint, it's NOT a Ferrari on day one.

Employees benefit through indirect ownership, not personal shareholdings. When implemented properly, this can lead to:

Higher engagement and retention.

Greater transparency around performance.

Eligibility for income tax-free bonuses (up to £3,600 per year).

A stronger long-term commitment to the business.

However, employee ownership is not a guarantee of higher pay or job security. Bonuses depend on profitability , and commercial discipline remains essential.

This is another area of misconception. The business must be profitable to pay that bonus, no cash, no bonus. There’s no magic “Government EOT Fund”. Also, the bonus, while tax free, is still subject to National Insurance payments.

The Biggest Risks of an Employee Ownership Trust

EOTs fail when realism is replaced by optimism. The most common risks include:

Overvaluation , leading to unsustainable debt.

Cash flow strain , limiting reinvestment and growth. The business in effect “buys itself”, so those payments can massively impact cashflow.

Owner dependency , where the business cannot function without the founder. An EOT can only work when there’s a STRONG and CAPABLE management team to take over from the previous owner(s).

Poor communication , resulting in confused or disengaged employees.

An Employee Ownership Trust is not a rescue plan for struggling businesses. It works best when the company is already profitable, stable, and well-managed.

How Are Employee Ownership Trusts Funded?

Most EOT transactions are funded using a mix of:

Deferred consideration (vendor loan notes) - in effect, the business "buys itself".

Bank or third-party finance , where cash flow supports it.

Limited upfront cash .

The key principle is affordability. The business must still be able to invest, grow, and withstand economic shocks while servicing the purchase price.

Preparing for an EOT: Business and Personal Readiness

Successful EOT transitions require preparation long before completion. Preparing a business for an EOT follows virtually the same path as a business preparing for outright sale. An EOT is NOT a route to avoid that work.

From a business perspective:

Strong management accounts and forecasting.

Reduced reliance on the owner.

Clear leadership and governance structures.

From a personal perspective:

Acceptance of reduced control.

A defined, time-limited post-sale role.

Willingness to prioritise sustainability over headline price.

Costs and Timeframes

Most Employee Ownership Trust transactions take 6–12 months and cost £30,000–£100,000+ in professional fees, depending on complexity. Some can of course be less, it’s very much dependent on the size of the business and structure of that business. A £2m business would expect to pay around £60,000.

It’s also worth pointing out that handover periods with the current owner(s) can vary considerably.

Rushing the process is one of the most common and costly mistakes.

Final Thoughts: Are Employee Ownership Trusts Still Worth It?

In 2026, Employee Ownership Trusts are no longer a tax shortcut. They are a strategic succession choice.

For the right business, profitable, people-driven, and future-focused, then an EOT can deliver stability, continuity, and a dignified exit for owners. For the wrong business, it can simply defer problems. The business MUST have a strong and capable management and leadership team to drive the business.

If you’re considering an Employee Ownership Trust, the question is no longer “How much tax will I save?”.

It’s “Is this the right long-term structure for my business and my people?”.

If you would like to discuss this further, give me a shout here .

When Should I Start Exit Planning?

Wed, 28 Jan 2026 08:57:50 GMT

When Should I Start Exit Planning?

When Should I Start Exit Planning?

What a great question. Easy answer, LONG before You “Need” To

Most small business owners don’t wake up one morning and decide, “Today feels like a great day to plan my exit.”

They wake up tired.

Or injured.

Or burned out.

Or fed up.

Or staring at a pension statement that looks… optimistic at best.

And then they start thinking about leaving.

That’s the problem. A business exit is NOT an event, it’s a process , and it’s a process that can take many months or years.

If you’re asking when to start exit planning , the honest answer is this: Much earlier than you think , and definitely before you feel forced to .

Let’s talk about why…

Exit Planning Isn’t About Leaving

It’s About Options. In the UK, most small business owners don’t “exit” dramatically.

They drift. They struggle. They sell under pressure. Or they shut the doors quietly and move on. Remember, in the UK, 80% of businesses listed for sale NEVER sell.

Not because they were bad at business, but because they left exit planning too late.

A proper exit readiness plan doesn’t mean you’re cashing out tomorrow. It means you’re building a business that gives you choices.

Choices like:

• Selling in 3–5 years.

• Passing the business on (succession planning, management, or employee buy-out).

• Stepping back without everything collapsing, semi-passive income. A business exit doesn’t always mean selling.

• Retiring without panic maths and crossed fingers.

Quick Reflection moment:

If you had to step away from your business in 12 months, through choice or circumstance, what would actually happen?

The Dangerous Myth: “I’ll Sort It When I’m Ready”

Here’s the brutal truth: By the time most owners feel ready to sell, retire, or step back… buyers aren’t ready to buy.

Why? Because good exits require:

• Clean finances

• Predictable profits

• Systems that don’t rely on you

• A business that works without heroic effort

And those things don’t magically appear when you decide you want out. They take years, not months. That’s why business exit strategy timing matters so much.

Quick Reflection moment:

Is your business currently built for your lifestyle, or for someone else to own?

“But I’m Not Selling Yet” (That’s Exactly Why You Should Start)

Exit planning isn’t about putting a “For Sale” sign up. It’s about asking better questions now, while you still have time.

Questions like:

• Could someone else realistically run this business?

• Would a buyer see opportunity… or risk?

• Does the business depend on your skill — or a system?

• Is your income a wage in disguise, or a return on an asset?

• How can I improve the value of my business?

This is the difference between:

• Owning a job and

• Owning something valuable, something SELLABLE.

Quick Reflection moment:

If you removed yourself from daily operations, what would break first?

Retirement Planning for Business Owners: The Bit Nobody Talks About

Here’s an uncomfortable truth: For many small business owners, the business is the pension.

No employer contributions. No guaranteed pot. Just the hope that one day the business will be “worth something”. But 80% of businesses never sell, so hope is not a good plan.

If your retirement relies on selling the business, then:

• Exit planning is retirement planning

• Business value is future income

• Timing matters more than motivation

Leaving it late often means accepting:

• A lower valuation

• A rushed sale

• Or no sale at all - be one of the 80%

Quick Reflection moment:

If your business didn’t sell for what you expect, what would retirement actually look like?

The 3–5 Year Rule (Even If You Never Sell)

Here’s a practical mindset shift: Always run your business as if you might sell it in 3–5 years.

Even if you don’t. Why? Because businesses built to sell:

• Are more profitable

• Are less stressful

• Give owners more freedom

• Survive shocks better

Ironically, the owners who plan their exit early are often the ones who enjoy staying the longest. Because they’re no longer trapped.

Quick Reflection moment:

What would need to change in the next 12 months to make your business “sell-ready”, even if selling isn’t the goal?

So… When Should You Start Exit Planning?

Here’s the simplest answer you’ll hear today:

The best time to start exit planning was when you started the business.

The second-best time is now. Right now, not later.

Not because you’re leaving. But because you’re serious about building something that works for you, not the other way around.

Exit planning isn’t giving up. It’s growing up as a business owner.

And future-you will be very glad you did.

Getting started is simple, easy and with NO COST . Start the simple valuation process and see what your business is currently worth, and could be worth. Get your valuation here .

When Selling What's Best - A Share Deal or Asset Deal?

Fri, 16 Jan 2026 15:10:06 GMT

When Selling What's Best - A Share Deal or An Asset Deal.

Share Deal vs Asset Deal: What’s the Difference When Selling Your Business?

You’re selling your business. Great. Now someone says: “Is it a share deal or an asset deal?”

You nod, but inside you panic, because you’re not sure what the difference is. Let’s fix that quickly but in a way your labador will understand, leaving out all the M&A bullshit.

First: What Are You Actually Selling?

There are two ways to sell a business:

• A Share Dea l that’s when you sell the company

• An Asset Deal that’s when you sell the stuff

That’s it. That’s the whole thing. Everything else is detail. Now let’s break it down so simply it hurts.

Share Deal “You Take the Whole Thing”

What it is.. You sell your shares in the company.

The buyer gets:

• The company

• The contracts

• The customers

• The staff

• The debts

• The skeletons in the cupboard

They buy the lot. No cherry-picking. Think of it like selling a house with everything still inside. OK, simple so far, yeah?

Why would you choose a share deal? You’d consider a share deal because:

• Cleaner exit – you’re done. Walk away.

• Tax can be better – often qualifies for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). That said, Rachel from accounts did a number on this so this is nowhere near as cushy as it used to be.

• Contracts stay put – no need to reassign everything.

• Staff stay employed – no messy TUPE headaches.

In short: Less admin, less hassle, it’s more like “thanks and goodbye”. Still good, yeah? Let’s look at this from the buyers eyes now.

Why buyers sometimes hate it

• They inherit past mistakes

• Old tax issues become their problem (expect to give warranties for this)

• Any hidden rubbish comes with the deal (ditto above, they will want assurances)

Which is why buyers often push for…

Asset Deal – Which Means “I’ll Take the Good Bits”

What it is.. You sell specific assets, not the company.

That might include:

• Equipment

• Vehicles

• Stock

• Customer lists

• Brand name

• Website

• Contracts (sometimes)

The company itself stays with you. Think of it like selling the furniture, kitchen, and dog, but keeping the house. Not ideal really is it?

Why would you choose an asset deal? You’d consider an asset deal because:

• Buyer only wants part of the business

• Easier if your company has baggage

• Flexible, sell what you want, keep the rest

• Useful if the business is struggling but assets still have value

It’s often used when:

• The buyer doesn’t trust the company history

• The business isn’t incorporated properly

• There are risks they don’t want touching them

Why sellers often hate it

• More tax pain – can be less efficient

• You may still own a shell company afterwards

• Staff and contracts don’t automatically transfer

• More admin. More lawyers. More invoices.

The Blunt Comparison

Thing Share Deal Asset Deal

Selling The company The bits

Buyer risk Higher Lower

Seller hassle Lower Higher

Tax (often) Better Worse

Clean exit Yes Not always

So… Which One Is “Better”?

Annoying answer: it depends. Sorry, but it does. This is a blog, not a legal helpline, so it depends!!!

Brutally honest answer:

• Sellers usually want a share deal

• Buyers can prefer an asset deal

The final structure is normally decided by:

• Tax

• Risk

• Negotiation power

• Who’s more desperate

Final Thought (Read This Bit)

This is not something you wing. And it’s definitely not something you let your mate “who’s good with numbers” handle. Your mate down the pub “who’s sold a business” is more likely to land you right in the shit… you have been warned.

Get:

• A proper accountant

• A proper solicitor

• Advice before you agree anything

Because choosing the wrong deal can cost you six figures without you even noticing.

If you want, I can:

• Explain which one usually suits small UK businesses

• Break down tax differences in plain English

• Or help you spot which deal a buyer is quietly pushing you into

Just say the word. Give me a shout here .

What KILLS A Business Sale?

Wed, 14 Jan 2026 15:33:10 GMT

The 7 Biggest Deal-Killers When Selling a Business (And How to Fix Them Early)

Most business owners assume a sale falls apart because the buyer didn’t have the cash or because the price couldn’t be agreed. In reality, that’s rarely what kills a deal.

What really sinks most sales are a handful of hidden problems that only show up once a buyer starts digging. These are the real business sale deal killers, and they explain exactly why buyers walk away halfway through what looked like a sure thing.

This is why preparation is key , every one of these deal breakers is avoidable and CATCHABLE with a bit of effort. You have work years, maybe decades, building a business, why rush the sales process now?

#1 – The Numbers

It usually starts with the numbers. When a buyer begins due diligence, the first thing they look at is your financial records. They don’t expect perfection, but they do expect your figures to be clear, consistent and backed up by evidence.

If your profit and loss reports don’t match your tax returns, or if the books are held together by spreadsheets and memory, alarm bells go off. These kinds of due diligence issues create doubt, and doubt is fatal to a deal. Getting proper financial records for sale in place one or two years before you ever think about selling is one of the smartest moves a business owner can make.

#2 – Over Reliance On Key Customers

Another common problem is over-reliance on a small number of customers. If one or two clients generate a big chunk of your revenue, a buyer will see it as a serious customer concentration risk . In their mind, it only takes one awkward phone call or one lost contract for the whole business to wobble.

Buyers want to know that income is spread across many customers and supported by a steady flow of new leads, not propped up by a couple of fragile relationships.

In a buyers eyes, those customer relationships can be lost as soon as you leave the business.

#3 – The Business Only Works Because of YOU

Then there’s the issue of the owner being too important. If you are the person who does all the selling, holds all the key relationships, and makes all the decisions, buyers will struggle to imagine the business surviving without you.

From their point of view, they’re not buying a business at all, they’re buying your job. The earlier you start stepping back, documenting how things work and letting your team run the day-to-day operation, the more valuable and saleable the business becomes.

Be under NO ILLUSION that a buyer will NOT buy a job, especially a low paying one.

#4 Staff Risks

Staff can also make or break a sale. Buyers worry about what happens if a key employee leaves the moment the business changes hands. High staff risk is especially dangerous when there are no proper employment contracts, no notice periods and no protection around client relationships or confidential information. A business that depends on one or two people who could walk away is always going to feel risky to a buyer, no matter how good the numbers look.

#5 Contracts and Compliance

Legal and regulatory issues are another silent deal-killer. During due diligence, buyers will go through your customer agreements, supplier contracts, employment terms, licences, insurance and data protection processes.

Weak contracts and compliance can spook even the most enthusiastic buyer. If customers aren’t tied into agreements or if your paperwork is incomplete, the revenue suddenly looks shaky and the legal risk starts to feel uncomfortable.

#6 Weak Or Inconsistent Profitability

Profitability also plays a bigger role than most owners realise. Big turnover looks impressive, but buyers care far more about stable, predictable profit. If your margins jump around from year to year, it becomes hard for a buyer to forecast what the business will earn in the future. That uncertainty makes them either walk away or push hard for a lower price.

#7 Poor Records and Missing Paperwork

Finally, there’s the simple but deadly issue of missing or disorganised paperwork. When contracts, leases, licences or ownership documents can’t be found, the buyer starts to wonder what else is hidden. These small due diligence issues slow everything down and quietly erode trust, which is often all it takes for a deal to collapse.

This is why buyers walk away so often. It’s rarely about one big disaster. It’s the slow build-up of risk, uncertainty and doubt as they look under the bonnet of the business.

The owners who get the best exits understand one thing: you don’t prepare to sell when you want to sell. You prepare years earlier. By sorting out your financial records, reducing customer and staff risk, tightening up your contracts and making the business less dependent on you, you remove the deal-killers before they ever get a chance to do their damage. And when that happens, selling your business becomes far easier, and far more profitable.

If you’re serious about planning your exit, there’s a simple three-step path that cuts through the guesswork, and I provide all of it free.

Start with the free valuation. It takes five to ten minutes and gives you a fast, high-level snapshot of what your business might be worth. Start that HERE .

Once that’s done, the next step is the in-depth valuation . The free one is only a rough guide, this is where the real insight lives. We spend one to two hours pulling your business apart properly, and it’s only for owners who genuinely want to build a saleable, valuable business.

Then we lock it all in with a Power Hour . We go through your valuation, your scenario planning and the exact steps that will increase the value of your business and get you exit-ready.

By the end, you’ll know what your business is worth, what it could be worth, and exactly what needs to happen to get you there, whether your exit is in two years or ten.

It’s never too early to start exit planning, but it can be too late.

Why 80% of UK Businesses Listed for Sale Never Sell (And How to Be in the 20%)

Tue, 06 Jan 2026 09:40:35 GMT

Why 80% of UK Businesses Listed for Sale Never Sell (And How to Be in the 20%)

If you’ve ever typed “how to sell my business” into Google, here’s a stat that should make you sit up straight, 80% of UK businesses listed for sale never actually sell.

Not struggle to sell, not sell for less than expected. They don’t sell at all. And no, it’s not because those businesses are rubbish. It’s because most owners misunderstand what selling a business really involves.

Let’s break down why businesses don’t sell, and more importantly, how to make sure yours is one of the 20% that does.

Why Businesses Don’t Sell.

Most failed sales don’t collapse at the negotiation stage. They fail long before a buyer ever makes an offer. Here are the most common business sale failure reasons I see time and time again in the UK SME market.

1. The Business Is Too Dependent on the Owner

This is the biggest killer of SME sales in the UK.

• customers want you, not the business

• decisions can’t be made without you

• key knowledge lives in your head

• you can’t step away for more than a few days

Then buyers don’t see a business, they see a job that stops working when you leave. Buyers want:

• systems

• processes

• management structure

• continuity

If removing you causes chaos, the business is unsellable in its current form.

2. Financials Aren’t Buyer-Ready

Many owners think, “The accountant sorts all that.” Buyers disagree. Common financial red flags include:

• messy or inconsistent management accounts

• unclear margins

• personal expenses mixed into the business

• unexplained fluctuations in profit

• no forward forecasts

A buyer needs to understand:

• how the business makes money

• how predictable that income is

• how profits can be maintained after you exit

If they can’t see that clearly, they either:

• walk away, or RUN, or

• slash the offer price

3. The Business Has Too Much Risk

Buyers don’t buy potential. They buy reduced risk. Key risks that kill SME sales include:

• reliance on one or two major customers

• key staff who could leave post-sale

• informal or missing contracts

• poor compliance or documentation

• no clear handover plan

The higher the perceived risk, the less attractive the business becomes, regardless of turnover.

4. Owners Start Exit Planning Too Late

This one hurts the most. Most UK owners only think about selling when:

• they’re exhausted

• health is suffering

• motivation has gone

• or they need the money

At that point:

• options are limited

• leverage is gone

• buyers can smell urgency

Exit planning works best when it starts early , ideally 2–5 years before a sale. Selling a business isn’t an event. It’s a process.

How to Be in the 20% That Do Sell

The good news? The businesses that do sell aren’t lucky, they’re prepared, and so can YOU. Here’s how to improve business saleability and make your business attractive to buyers.

1. Prepare the Business for Sale (Not Just the Listing)

Putting a business “on the market” is not preparation. Preparation means:

• reducing owner dependency

• cleaning up financials

• documenting systems and processes

• strengthening management

• addressing risks before buyers find them

This is why exit planning matters. You’re not preparing to sell today, you’re preparing to be sellable at any time.

2. Make the Business Run Without You

The more the business works without you, the more valuable it becomes. This involves:

• SOPs and documented processes

• clear roles and responsibilities

• delegated decision-making

• management accountability

Ironically, this often improves:

• profit

• work-life balance

• and growth

Even if you decide not to sell you now have a business that’s a lot more enjoyable and profitable. That's what we refer to as "The Business Exit PARADOX".

3. Make the Numbers Clear, Credible and Defensible

Buyer-ready financials include:

• consistent management accounts

• clear EBITDA

• justified add-backs

• predictable cashflow

• transparent reporting

If a buyer can’t understand your numbers quickly, they won’t trust them. And no trust = no deal.

4. Reduce Risk Everywhere You Can

Every risk you remove:

• increases buyer confidence

• increases valuation

• increases likelihood of sale

This includes:

• diversifying customers

• securing key staff

• tightening contracts

• improving compliance

• creating handover plans

Low-risk businesses attract more buyers , and more buyers mean better outcomes.

The Reality of SME Sale in the UK

Most SME owners believe that “My business will sell when the time comes.” Statistically, that’s unlikely without preparation. The owners who succeed:

• plan early

• get honest about weaknesses

• fix problems before they become deal-breakers

They don’t hope for a sale. They engineer one. They CREATE the opportunities , not wait for them.

Final Thought: Exit Planning Isn’t Just About Selling

Here’s the twist most owners don’t expect. Once you prepare your business properly:

• stress reduces

• hours drop

• profits often improve

And many owners realise they don’t actually want to sell, they just wanted options. That’s the real power of exit planning. That’s what we refer to at Junction Twenty as “The Business Exit Paradox”.

Want to Know Where Your Business Stands?

If you want to find out:

• why your business would or wouldn’t sell

• what’s holding value back

• what buyers would challenge

• and how to fix it

Start with a proper exit readiness review, before the market decides for you. The great news, Junction Twent y is now an official partner with BizVal , so we take business valuations seriously, and not with a pinch of salt. Use this link, an d let’s talk about what’s best for you.

The Valuation is NOT free (it’s £99), but the chat beforehand is both free and very worthwhile.

Because the difference between the 80% and the 20% isn’t luck… It’s preparation.

Is My Business Sellable? It's Just Me.

Fri, 19 Dec 2025 13:57:08 GMT

Who Will Buy My Business? It's Just Me.

Can My Business Be Sold, It’s Just Me? Who Will Buy It?

Why Solopreneur Businesses Do Have Value, and CAN Be Sold

Let’s clear something up straight away. If your business is small, if it’s just you, if it relies heavily on you showing up to make the magic happen, that does not mean it has no value.

This may sound contradictory to what you’ve been told and read before, and indeed IT IS , but bear with me here. But the fact is, for the right buyer, that’s not a weakness at all. It’s the entire appeal.

There’s a persistent myth floating around the business world that only slick, systemised, staff-heavy businesses are worth anything. You know the type: layers of management, complicated org charts, and a payroll that would clear the debt of a third world country.

But that’s only valuable to one type of buyer. We’re going to talk about an increasing number of “Lifestyle Business Buyers”, a whole other group of buyers out there quietly looking for something very different.

Meet the Lifestyle Buyer

Lifestyle Business buyers aren’t looking to be the next Elon Musk or planning to flip the business in three years. They’re looking for something far more human.

Common examples include:

• Teachers leaving the profession who still want meaningful work without marking homework at midnight.

• Couples looking for a business that fits around family, travel, or shared values.

• Corporate escapees who’ve had enough of pointless meetings and “circle back” emails.

• Professionals in their 40s and 50s who want income, autonomy, and sanity, not stress and a team of hundreds.

What they’re not looking for?

• Managing staff.

• Office politics.

• HR headaches.

• Becoming a full-time firefighter for other people’s problems.

They want control, clarity, and a business that works with their life, not against it. And that’s exactly where solopreneur businesses shine.

The Big Myth: “If It Relies on the Owner, It Has No Value” - It's Different Rules For A Lifestyle Buyer.

This idea needs to be gently but firmly shown the door. Yes, some buyers want businesses that run without them. But others want the opposite. It is worth mentioning here that while “Lifestyle Buyers” will be interested in a “Solopreneur” or Micro Business, it still has to be well structured, well systemised, have tidy financials etc.

If your business is an absolute chaotic shit show with every process in your head, that business has ZERO value. This is why 80%+ of businesses listed for sale in the UK NEVER sell, they are unsellable.

A Solopreneur business has value that:

• Needs one capable person.

• Has clear services.

• Has loyal customers

• Generates predictable income.

• Doesn’t require hiring anyone.

They also want a business that is not broken, they want a business that’s perfectly positioned for them as the new buyer to step into a role, not build an empire.

Think of it like buying a job, but a better one. As a “Lifestyle Business BUYER” : -

• You choose the hours.

• You choose the clients.

• You choose the direction.

• You keep the upside.

For many buyers, that’s the dream.

Why Owner-Led Businesses Can Be More Attractive

Here’s why “owner-reliant” can actually be a selling point:

1. Simplicity

No teams. No drama. No endless management tasks. The buyer knows exactly what they’re getting. I must stress again though that systems, processes and structure are still vital. Everything in the head of the current owner is a deal breaker.

2. Lower Risk

Fewer moving parts = fewer things to go wrong. Lifestyle buyers don’t want complexity. They want stability. Most Lifestyle Buyers have had years of corporate stress and hassle, they want away from that, not PAYING for more.

3. Easier Transition

If the business is built around one person, it’s easier to hand over properly:

• Training, a clean handover is vital, in effect, they become you. Expect a sensible hand over period, more to ensure a smooth customer transition.

• Client introductions, as above, the old owner needs to slowly introduce the new owner.

• Knowledge transfer, but without needing a full brain transplant to pass on that knowledge.

That’s far simpler than inheriting a disgruntled team you’ve never met.

4. Values Alignment

Many lifestyle buyers care deeply about how they work. Many will be buying businesses that align with their core values.

• Ethical practices

• Community focus

• Flexibility

• Sustainability

Micro businesses often already embody these values, that’s where you have a distinct advantage.

“But I Don’t Want to Employ Anyone…”

Good. That’s not a flaw. That’s a filter. You’re not trying to sell to everyone. You’re selling to someone specific. There is a huge and growing market of people buying businesses who:

• Don’t want staff.

• Don’t want growth for growth’s sake.

• Don’t want to scale into exhaustion.

They have already done this, they want away from that, not more of it.

What they want, what they really, really want:

• A decent income.

• Control of their time.

• Work they actually enjoy.

That’s a completely valid business model.

So, In Summary - What Actually Creates Value in a Solopreneur Business?

Value doesn’t come from headcount. It comes from things like:

• Consistent revenue.

• Clear services or offers.

• A recognisable brand or reputation.

• Repeat customers or referrals.

• Documented processes (even simple ones).

• Proof the business supports a decent lifestyle.

If your business does those things, it has value. It may not suit a private equity firm, but it doesn’t need to, you’re not even remotely interested in pitching there.

The Bottom Line

Micro businesses and solopreneur businesses can be sold. They do have value.

And for lifestyle buyers, they’re often exactly what’s wanted. So if you’ve ever thought: “It’s just me, so it’s probably not worth much…” Think again.

To the right buyer, your business isn’t “too small”. It’s just right. How Do You PREPARE Your Micro Business for Sale? That’s the easy bit, I have a monthly course, nine modules over nine months that get you and your business prepared.

This course is designed ONLY for Solopreneurs and Micro Business Owners. Be one of the 20% that do sell on not one of the 80% that don’t. Would you like to chat more about this?

Who Will BUY My Business

Mon, 15 Dec 2025 07:28:41 GMT

Who Will BUY My Business?

Who Will Actually BUY My Business?

The 3 Types of Buyers You’ll Meet When Selling Your Business., an d why they’re not all created equal

When business owners talk about “selling up”, they often imagine one mythical buyer turning up with a huge bundle of cash, and after a brief discussion, the deal is made. Not even close.

In reality, most small businesses meet three very different types of buyers. Each comes with their own mindset, motivations, and ability (or inability) to pay what your business is actually worth. Let’s break them down, then you’ll be able to identify which one suits you best.

1. The Lifestyle Buyer

Who they are:

Usually an individual (or couple) buying themselves a job. Often escaping corporate life, redundancy, or mid-life boredom.

Key traits

• Wants steady income and stability.

• Likes simple, understandable businesses.

• Nervous about risk and change.

• Often needs training and hand-holding.

Advantages

• Emotionally invested.

• Usually serious once committed.

• Can move quickly if the business feels “safe”.

Disadvantages

• Price sensitive.

• Lower valuations (typically 2–3x profit).

• Easily spooked by complexity or heavy owner reliance.

Bottom line:

They’re buying a lifestyle, not growth or scale. Most lifestyle business buyers expect to be heavily involved with the business. That doesn’t mean they will buy chaos, indeed, the total opposite. A lifestyle buyer will be looking for systems, processes and a systemised business.

2. The Strategic Buyer

Who they are:

Another business in your industry (or nearby), looking to bolt you onto what they already have. This is where most business sales are.

This could be a local competitor or a non competing competitor looking to expand into your area. It could also be a business in a related industry looking for new income streams within the same client base

Key traits

• Focused on synergy and efficiency.

• Sees value in customers, staff, systems, or licences.

• Less emotional, more calculated.

• Often already profitable without you.

Advantages

• Often the highest offers.

• Less concerned about small inefficiencies.

• Faster growth potential post-sale.

Disadvantages

• Tough negotiators.

• Will challenge every number.

• May want you out quickly after handover.

Bottom line:

They’re buying what your business adds to theirs, not just your profit.

3. The Financial Buyer

Who they are:

Investors, acquisition entrepreneurs, or small private equity groups buying for return on investment. Small business owners dream of Peter Jones coming along and investing in their business, sadly, for most, that ain’t the case. Investors will have ZERO interest in a business that is owner reliant, shows low scaling opportunities and/or lacks solid IP.

Key traits

• Obsessed with numbers and forecasts.

• Loves systems and processes.

• Hates owner-dependency.

• Very thorough due diligence.

Advantages

• Professional and structured.

• Can pay strong multiples if risk is low.

• Sees upside in scalable businesses.

Disadvantages

• Long sales process.

• Endless questions.

• Zero emotional attachment.

Bottom line:

If your business runs without you, they’ll pay more. If it doesn’t, they won’t.

The honest truth

Most small businesses attract lifestyle buyers by default.

The businesses that sell for serious money are the ones built to attract strategic and financial buyers.

That means:

• Systems, not heroics. Preparation is KEY here.

• Predictable profits, not “busy”. Profit not turnover wins the day.

• A business that works without you. Not a fortnight off, that’s a business that can manage without you, not run without you.

Build for all three, and you get options.

And options are where the leverage (and better exits) live.

It’s never too early to start exit planning, but it can be too late.

It's never to early to TALK about exit planning either. It can take 2-3 years to see changes on your bottom line.

How to Start Exit Planning 2–5 Years Before Selling Your Business

Mon, 14 Jul 2025 07:19:47 GMT

Why Starting Exit Planning EARLY Is So Important

Thinking of selling your business “one day”?

That day comes faster than you think. Here’s how to plan your exit properly without giving yourself a whole load of added stress.

Why Plan So Early?

Most micro-business owners are so busy running their business that they forget to prepare to leave it. But here’s the thing: exiting a business isn’t a one-off event, it’s a process. Ideally, it starts 2 to 5 years before you want to walk away.

Why?

Because a good exit takes time. You need to:

• Maximise business value

• Get your financials in order

• Find the right buyer (or successor)

• Prepare emotionally and practically to move on

• Knowing that 80% of businesses listed NEVER sell.

So, if you think your future self might want to sell, retire, or simply do something else… it’s time to lay the groundwork.

The best time to start this was yesterday, don’t wait until tomorrow – start today.

Step 1: Define Your Personal Goals

Your exit plan starts with one simple question: what do you actually want next?

• Are you aiming to retire?

• Do you want to start something new?

• Do you need a lump sum, or ongoing income?

Knowing this helps you set a target sale value or outcome. It also affects who the best buyer might be.

Jct20 Tip: Write down what your “perfect exit” looks like. Be honest. Beach? Bungalow? Brewing your own beer?

Step 2: Get a Rough Valuation

Before you can improve the value of your business, you need a ballpark figure for what it’s worth now.

• We’ll help you with a realistic valuation, and the factors that influence it.

• Get clear on how valuation works in your sector (e.g., profits, assets, client base, goodwill)

Most micro-businesses are worth 2–3 × annual profit, but only if they don’t rely solely on the owner. (We’ll come back to that.)

Step 3: Make Yourself Redundant – We Call This “Kill Bill”

One of the biggest things that kills a sale? The business can’t run without you.

Start shifting key tasks to:

• Systems

• Software

• Staff (if you have any)

• Freelancers or outsourced providers

Document your processes (aka Standard Operating Procedures) so someone else could take over.

Even if you’re a one-person show now, show a buyer they could easily grow the business with help.

Remember this, without the above, you don’t have a business, you have a job, and no one want to buy a job.

Step 4: Clean Up Your Financials

Would you buy a car without seeing the service history? Exactly.

Buyers want:

• Clear, accurate financial records (ideally 3+ years)

• Up-to-date tax filings

• Profit-and-loss statements that make sense

• Minimal personal expenses muddled into business costs

• Realistic growth projections that can be quantified.

If your books are messy, get an accountant or bookkeeper to sort them well in advance.

Step 5: Increase Business Value

This is your chance to make the business more appealing (and more profitable):

• Add recurring income – Subscriptions, retainers, contracts.

• Diversify your client base – Avoid relying too heavily on one big client.

• Raise prices – Charge what you’re worth.

• Strengthen your brand – Website, testimonials, trust.

• Reduce costs – you will be amazed by all the extra costs that “creep in” – every £1 of costs comes right off your bottom line.

Each of these makes your business less risky and more valuable to a buyer.

Step 6: Know Your Exit Options

Not every sale is a big cheque from a stranger. Think through:

• Trade sale – Sell to another business in your industry.

• Management buyout – Your team takes over.

• Family succession – Hand it to the next generation.

• Employee ownership – Like an Employee Ownership Trust.

• Wind-down – Sometimes, the best option is to close gracefully.

Each path has pros, cons, and tax implications. Get advice early!

Step 7: Build a Team of Advisers - NOT mates down the pub that know someone

Don’t try to DIY your exit, especially not in the final stretch. Assemble your exit squad:

• Accountant (preferably one who’s helped others sell)

• We’ll help you prepare, but you’ll still need a trusted broker (we can help there too)

• Solicitor familiar with small business sales

• A good wealth planner, tax advisor and financial advisor.

The earlier they’re involved, the more they can help you shape the business into something someone actually wants to buy.

Step 8: Get Emotionally Ready

Letting go can be tough, even if you're ready financially. 75% of business owners regret exiting in the first year after sale.

• Start creating a post-exit plan

• Test out taking more time away from the business

• Talk to other owners who’ve exited

A successful sale doesn’t just fill your bank account, it gives you freedom, peace of mind, and a clean handover.

Final Thought

Exit planning isn’t just about selling, it’s about future-proofing your business, creating options, and building a life you want.

Ironically, preparing a business for sale could actually mean you no longer need or want to sell.

Even if you’re not 100% sure when you’ll sell, starting 2–5 years in advance gives you breathing room to get the best deal, and on your own terms.

The worst scenario in the world is when you need to sell.

Did this help ?

Stay tuned for more helpful info and blogs. Want help making your business more sellable? Get in touch, exit planning isn’t just for big corporations.

Drop me a message , always happy to have an initial chat.

Remember 80% of businesses listed never sell, because, sadly, they are not sellable.

What Makes a Small Business Attractive to Buyers?

Thu, 10 Jul 2025 07:31:56 GMT

What Makes a Small Business Attractive to Buyers? Hint - It's a Lot More Than Just Profit...

What Makes a Small Business Attractive to Buyers? (Hint: It's Not Just Profit)

Look at this as Tinder, for business…

Let’s cut right to the chase. You know I’m blunt, direct, streetwise, and often just plain rude, but it needs to be.

Just because your business is busy, profitable, and well known locally, doesn’t mean anyone wants to buy it.

Shocking? Maybe. But it’s true. This was me.

I had an award-winning, multi-million pound business that was making a TON of money. That business was worth a FRACTION of what it could have been worth. WHY?

Because the business was ME. It’s all covered in the Amazon #1 Best Seller – “How To Wreck Your Business”

When buyers are scoping out small businesses, they’re not just looking at how much cash it throws off, they’re asking one crucial question:

“Can I run this without the current owner? Can this thing run without falling apart? Am I buying a business or a job?”

If the answer is “errr… maybe, but not really” — you’ve got some work to do.

Remember this. Over 80% of businesses listed for sale NEVER SELL. It’s not because they are bad businesses, it’s not because they are not making money. It’s because the business is NOT SELLABLE.

Here’s what actually makes your business attractive to buyers, and what might be quietly killing your chances of a successful (and profitable) exit.

1. It Can Run Without You Being There Every Bloody Day

If your business runs on your blood, sweat and weekends, it’s not a business, it’s a job. End of.

And buyers don’t want to buy your job. They want to buy an asset that works without you. I created a module called “Kill Bill” – let me know if you’d like to try that. It’s perfect for this.

Attractive businesses have:

• Clear roles and responsibilities (not just “ask Dave, he knows”)

• A team that can deliver without owner hand-holding

• Systems and processes that are actually written down and used

Hard truth: If you’re the engine, the glue, the fire extinguisher, and the decision-maker, you’re also the liability.

2. Clean, Understandable Financials

Buyers aren’t mind readers, and they definitely don’t want to play forensic accountant just to figure out where the money goes.

If your books are a mess, or your accountant is “creative”, you’re asking buyers to take a gamble. Most won’t. Due Diligence will be TOUGH for you in cases like this.

What buyers want to see:

• At least 3 years of clean, accurate financials

• A clear picture of profit (not buried in your cousin’s mobile phone bill)

• A reasonable salary for the owner factored in

Pro tip: Get a good accountant who knows what buyers look for, not just how to minimise your tax bill.

3. Recurring Revenue or Repeat Customers

A steady stream of income makes your business far more valuable. It gives buyers predictability, and that’s like gold dust.

Great signs:

• Contracts, retainers or subscription-style models

• Loyal repeat customers (tracked in a CRM or database, not your head)

• Sales that aren’t totally random or seasonal

No one wants to spend half a million buying a “feast or famine” setup.

4. Strong Brand and Reputation (Beyond Your Personal Name)

If you are the brand, you’ve got a problem. Because when you walk out the door, the brand equity goes with you.

Buyers want a business with a reputation that stands on its own. That means:

• A memorable business name

• Positive reviews, testimonials, and word-of-mouth reputation

• Marketing that doesn’t rely on your personal Facebook profile

You can still be involved — but if the brand falls apart without you, you’re not selling a business, you’re selling yourself short.

5. Documented Systems and Processes

This is the boring bit no one wants to hear, but it’s the key to unlocking serious buyer interest. Good CRM’s are worth their weight in gold. When I had my business we created our own CRM (that’s another story).

When systems are documented, you’re selling a machine.

When they’re not, you’re selling chaos with a smiley face.

Examples of sellable systems:

• A step-by-step onboarding process for customers

• A repeatable quoting or estimating process

• Staff handbooks, training manuals, or SOPs

Systems = scalability. And buyers love things they can scale.

6. A Clear Growth Story or Opportunity

A business that’s just “plodding along” might be fine for lifestyle owners. But serious buyers want to know there’s room to grow. Avoid at all costs saying “this business has great potential” – show it, document it, roadmap it. I have a module called “The Growth Curve” that nails this.

Can they add new locations? Upsell services? Cut costs or automate?

You don’t need to be growing now but the potential should be obvious and compelling.

If your business feels like it’s already peaked, you’ll have to work harder to get anyone excited about buying it. I refer to all this as “Desirability”, it’s an entire module in Junction Twenty.

Final Thoughts from me:

If your business isn’t attractive to buyers — it’s probably not in great shape for you, either.

Making it more sellable doesn’t just help with an exit.

It makes your life easier right now, more profit, less chaos, fewer emergencies.

So even if you’re not thinking of selling this year (or even this decade), here’s your wake-up call:

Start building a business someone would want to buy, so one day, you’re not forced to walk away from it with nothing. Start with the end in mind.

Let me be blunt, having a business that is SELLABLE more often than not means you won’t want to sell it. Why would you sell a cash cow asset that is FUN ?????

Want help getting your business sale-ready?

We work with small business owners who want to go from chaotic but profitable to sellable and scalable.

No fluff. No faff. Just real, practical steps to get your business in shape.

Use this link to get started, let's have a quick chat?

Have a peak at my website too.

The programme is called "Junction Twenty" - it's the smart way for small business owners to plan their exit.

How Do I Sell My Business Quickly?

Sun, 23 Feb 2025 17:26:23 GMT

How Do I Sell My Business Quickly?

How Do I Sell My Business Quickly?

How to Sell Your Small Business Quickly (Without Losing Your Sanity)

So, you’ve decided it’s time to sell your small business. Maybe you’re ready for a new adventure, maybe you’re tired of customers who think deadlines are optional, or maybe you just want to spend your days somewhere other than glued to your phone.

Whatever the reason, you want to sell – and you want to do it fast....

Selling a business isn’t quite as simple as whacking a ‘For Sale’ sign in the window and hoping for the best. But don’t worry – here’s how to get it done efficiently and without too much stress.

There’s a few horrible statistics you need to know. We know, most statistics are made up, but sadly these ones aren’t. 80% of Businesses listed for sale NEVER sell – ever. Also, 75% of business owners regret selling within a year of exit.

The reason? Lack of preparation OR an unrealistic expectation of selling price. A business turning over £100,000 and making £500 net profit is not going to sell for £1.5m.

Here’s a few of our tips and things we help with – ‘cuase we’re nice that way. We’ll help you whether you use us or not.

1. Get Your House in Order (Literally and Financially)

Before you even think about listing your business, you need to get your books in order. Buyers love tidy financials – not shoeboxes full of crumpled receipts. Make sure your accounts are up to date, debts are minimised, and any pesky tax issues are sorted.

Also, consider the aesthetics. A business that looks well-organised and running smoothly is far more attractive than one that resembles a sinking ship. If your website looks like it was built in 2008 or your shopfront has seen better days, a bit of sprucing up won’t hurt.

2. Know What Your Business is Worth (And Be Realistic)

Yes, you’ve put your heart and soul into this business, but that doesn’t mean someone will pay over the odds just because you love it. Get a realistic valuation – it’s really easy to get a simple industry-based multiple of your profits. That will give you a rough guide.

Also, be prepared to justify your price. If your valuation is based on ‘fantasy island’ rather than hard numbers, a buyer will likely try to knock it down faster than a dodgy garden fence.

3. Find the Right Buyer – Quickly

Time is of the essence, so start with the most likely buyers. Competitors, suppliers, employees, or investors already familiar with your business might be interested. If none of them bite, a business broker or online business marketplace can help find a wider audience.

And let’s be honest – selling to someone who already understands the business means fewer awkward ‘How does this work?’ conversations down the line.

Make up a list NOW of all your potential buyers. You’ll be surprised how many there could be.

4. Keep Things Hush-Hush (For Now)

The last thing you want is staff and customers panicking because they think the ship is sinking. Keep the sale confidential until you’ve found a serious buyer. Once you’ve got a solid offer, then you can break the news gently.

You may have go to the “Open Market” to increase your reach and increase your sale options and chances – this does carry RISK though.

5. Have Your Exit Plan Ready

A quick sale means you need to be ready to hand over the reins smoothly. That means having transition plans, supplier contacts, and key processes documented. If you can offer training or support post-sale, it makes your business even more attractive.

We can help here. Also ask us for our “Due Diligence” Checklist – that could be a life saver.

6. Don’t Get Bogged Down in the Negotiation

Selling a business can sometimes turn into a long-winded back-and-forth. Be clear on what you will and won’t accept early on. If someone tries to haggle you down to the cost of a second-hand van, don’t waste time – move on to the next buyer.

Again, use our “Due Diligence” Checklist – preparing for what WILL be asked for will save you time and SANITY later on.

7. Close the Deal (Properly!)

Once you’ve found your buyer and agreed on a price, make sure the legal side is watertight. Get contracts drawn up, ensure payment terms are crystal clear, and don’t hand over the keys until the money is in your account.

Jimmy down the pub has sold many businesses, we see Jimmy’s all the time – trust us - get PROFESSIONAL advice. If you think good legal advice costs a lot – wait until you see what shit legal advice will cost you.

Final Thoughts

Selling your business quickly doesn’t have to be a nightmare. If you get your finances in order, set a fair price, find the right buyer, and keep things professional, you’ll be sipping celebratory drinks before you know it. And who knows? Maybe your next big venture is just around the corner – preferably one that involves fewer emails and more relaxation!

Selling quickly has many disadvantages. Your potential buyer may smell an opportunity. You’ll be restricted on time to market your business. You’ll also have limited time to PREPARE. For that reason, a “Quick Sale” is 6-12 months, any less than that, and you could be heading for stormy waters

Good luck – and happy selling!

If you need help - this is what we do. Help you PREPARE to EXIT for MORE .

EBITDA or SDE - What's BEST?

Thu, 06 Feb 2025 07:18:15 GMT

What's Best To Value A Business - EBITDA or SDE?

Picture this: you're selling your business, and suddenly you're bombarded with fancy acronyms like SDE and EBITDA . Let's break it down with a dash of humour - because we like to keep things simple.

SDE (Seller's Discretionary Earnings) is like the superhero cape of your business. It's your earnings plus all those extra perks and quirks that make your business special. Think of it as your business's "net income" plus the sweet perks like company car usage, travel expenses, and that weekly pizza party you throw for your team (because happy employees are productive employees, right?).

On the other hand, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is like looking at your business through X-ray vision. It strips away all the extra fluff (like those pizza parties) and focuses solely on your business's operational performance. It's like saying, "Hey, let's see how much money this baby is making before we start considering the financial gymnastics."

In simple terms, small businesses tend to use SDE , and it’s always a juicer figure than EBITDA which is usually reserved for the mid to large businesses… aka “The Big Boys” (Gender Neutral Term).

So, when it's time to sell your business, remember this: SDE adds the sparkle and charm, while EBITDA gives you a no-nonsense, stripped-down view.

SDE will always be more than EBITDA. HOWEVER... ***WARNING*** - The Homer Simpson RED ALARM... Just because it "values" more, does NOT mean you'll SELL for more.

It's like trying to sell your house with or without all the fancy furniture inside. One's the full package deal, and the other's the bare bones. Choose wisely, and may the sale be ever in your favour.

Now the really super icing on the cake bit, with a cherry. You can get your FREE business score and see how your business compares with others in your industry (much better surely), and… yes, using the SDE Valuation, an indication of how much your business is worth. How cool is that?

Well also add another cherry (watch those calories) as we’ll include some hints, tips and advice on how to IMPROVE your business VALUE – so you can buy MANY more pizzas and cakes. Sound fair?

If you want extra Pepperoni on your business sale, let’s have a chat. You’ll be surprised how easy it is to ADD value.

How Do I VALUE My Business?

Tue, 01 Oct 2024 14:09:01 GMT

How Do I Value My Business?

How To Value Your Business - Explained I n A VERY Simplistic Way

Valuing a business can feel a bit like trying to price up a second-hand car - there are some general rules of thumb, but everyone’s got an opinion, and the final price might surprise you!

Let’s walk through a simple approach to give a rough idea of what your business might be worth, using the fictional Widget Co. as our guide.

It’s a true saying, “ask ten people to value your business, and you’ll get eleven answers”. This blog post is intended to be the roughest of guides as sadly too many business owners think their non profit making business is worth millions. It could be, but it’s unlikely.

Step 1: Start with the Profit (or "How much dosh does this thing actually make?")

First things first, buyers want to know how much profit the business makes. Widget Co. had a turnover of £400,000 , and after paying for everything from widgets to wages, the net profit was £59,000 last year. In the business world, people often talk about “multiples of profit” when valuing a company.

A typical small business might sell for somewhere between 2 to 4 times its annual profit. Some are more, some are less, this is a ROUGH guide.

So, let's take the £59,000 net profit and multiply it by, say, 3 (a middle-of-the-road figure for simplicity’s sake):

£59,000 x 3 = £177,000

That’s a ballpark estimate for the value of Widget Co. based on profits alone.

Step 2: Add the Value of Your Assets (because stuff matters too!)

Now, let’s not forget that Widget Co. owns some pretty valuable things. They’ve got a small industrial unit worth £180,000 and other assets (like equipment, machinery, maybe a couple of laptops and a kettle) valued at £85,000. The value of these assets gets added to the price because, well, they’re worth something!

So, add up the assets:

£180,000 (industrial unit) + £85,000 (other assets) = £265,000

There’s other considerations too, such as intellectual property, customer data (goodwill) etc. These are a bit more complex to value, however, they must be considered.

Again, let’s keep it real. A Go Daddy website with a basic shopping cart is not going to be worth £250,000.

Step 3: Combine the Two (It’s adding time!)

Now we combine the value of the business based on its profit with the value of its assets.

£177,000 (profit-based value) + £265,000 (assets) = £442,000

Voilà! We now have an approximate value for Widget Co. of £442,000.

Step 4: But Wait, There’s More! (Or Less…)

There are a few other things to consider that might nudge the value up or down. For instance:

• Debts: If Widget Co. has any loans or outstanding bills, you’d subtract those from the value. No one wants to buy your debt along with your widgets.

• Growth potential: If Widget Co. has been steadily increasing profits year after year, a buyer might pay more because the future looks bright. We call this “Growth Potential” and have an entire SERIES of modules built around it. It’s THAT important. Again, here’s the warning. These MUST be based on realistic numbers, and not a “pie in the sky” figure. Your £95,000 business is unlikely to have a growth potential of £5m.

• Market conditions: If the market for widgets is booming, that might push the price up. On the flip side, if everyone’s gone off widgets and started buying gadgets instead, it might lower the value.

Step 5: Have a Chat with a Pro (Because there's always something we've missed!)

This gives you a rough idea, but when it comes to selling a business, it’s always a good idea to get a professional involved, like a business valuer or accountant.

They’ll help you dig into the finer details and make sure you’re not leaving any money on the table—or asking for way too much. We help you prepare for sale and BUILD value, getting an unbiased, independent valuation is key.

Sadly, we see too many brokers massively overvaluing businesses simply to get the upfront fee. Also, avoid your mate down the pub, they can be accurate to +/- 2000%

Summary: Widget Co.'s Value

• Profit-based value: £177,000

• Assets: £265,000

• Total: £442,000 (before any adjustments for debts or market conditions)

And there you have it! A simple, lighthearted way to get a rough idea of what your business is worth. Now, go forth and sell that Widget Co. for a tidy sum!

Or start to prepare your business to sell for MORE.

Hold On, Someone Mentioned EBITDA – What Is That?

Let’s dig a bit deeper into business valuation by introducing a slightly fancier concept: EBITDA. It’s one of those acronyms that sounds scarier than it really is, but once you get to know it, it can be your best mate when valuing a business.

What’s EBITDA and Why Should I Care?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. Sounds like a mouthful, doesn’t it? But really, it’s just a way of looking at how much cold hard cash your business makes from its core operations—before things like loans, tax bills, and the wear and tear on your equipment start muddying the waters.

Basically, EBITDA tells potential buyers how much money the business generates from just doing its thing, which is why it’s often used in valuations. A higher EBITDA usually means a higher valuation, as it reflects the company's earning potential without extra financial baggage.

For smaller businesses a valuation can be obtained using " Sellers Discretionary Earnings " - we'll not muddy the waters with this (separate blog on this), and will be happy to explain the difference if you want to speak with us. This can often favour smaller businesses.

Step 1: Calculate EBITDA (Get to the Good Stuff)

Let’s use our trusty Widget Co. as an example. To calculate EBITDA, we start with the net profit (£59,000 in Widget Co.’s case) and then add back the costs of interest, taxes, depreciation, and amortisation. Here’s how it works:

1. Start with net profit: £59,000

2. Interest: Let’s say Widget Co. is paying £3,000 in loan interest.

3. Taxes: Widget Co. paid £12,000 in taxes last year.

4. Depreciation and amortisation: Widget Co. has some equipment that’s slowly losing value (depreciation), and it costs £5,000 a year. Amortisation is like depreciation but for intangible assets (like patents), but let’s say Widget Co. doesn’t have any of those.

Now, we add these costs back to the net profit to get EBITDA:

EBITDA = £59,000 (net profit) + £3,000 (interest) + £12,000 (taxes) + £5,000 (depreciation)

EBITDA = £79,000

Step 2: Why Buyers Love EBITDA (and why it can affect your valuation)

Buyers love EBITDA because it gives them a clearer view of how much profit the business really makes from its operations. By stripping out things like interest (which depends on how the business is financed) and taxes (which can change based on legal structures), they get a sense of how the business performs at its core.

When valuing a business using EBITDA, the same idea of “multiples” comes into play, much like with profit. Typically, small businesses might sell for between 3 to 5 times EBITDA, depending on the industry, growth potential, and other factors.

Let’s take Widget Co.’s EBITDA of £79,000 and apply a multiple of, say, 4 (right in the middle again, for simplicity):

£79,000 x 4 = £316,000

So, based on EBITDA, the value of Widget Co. could be £316,000.

Step 3: Don’t Forget the Assets (they’re still important!)

Just like before, we can’t forget the valuable assets Widget Co. owns—the industrial unit and other equipment. Those assets, valued at £265,000, need to be added to the EBITDA-based valuation.

So, combine the two:

£316,000 (EBITDA-based value) + £265,000 (assets) = £581,000

Now we have an even more detailed estimate of Widget Co.’s value: £581,000 based on EBITDA and its assets.

Step 4: Which Method is Better—Profit or EBITDA?

Both methods (using net profit or EBITDA) are widely used, but EBITDA is often seen as a more accurate reflection of a business’s true earning potential. It’s especially useful if Widget Co. has a lot of debt or high depreciation expenses that might skew the net profit downwards.

However, smaller businesses might not always have loads of interest, depreciation, or other costs, so using net profit could still give a fairly accurate picture.

Let’s Summarise: Widget Co.'s Value with EBITDA

1. EBITDA calculation: £79,000

2. EBITDA-based value: £316,000 (using a 4x multiple)

3. Add assets: £265,000

4. Total business value: £581,000

And there you go—another way to get an approximation of what Widget Co. might be worth. Now you can walk into those valuation meetings armed with EBITDA, net profit, and a solid understanding of how all the pieces fit together.

You’ll sound like a business valuation pro!

We're all about adding value to your business. Taking the time to get you and your business READY for sale.

80% of businesses that are listed for sale NEVER sell, we'll help you navigate that minefield too.

Would you like to chat? Here's the link .

Locked Box or Completion Accounts

Tue, 24 Sep 2024 07:07:09 GMT

Locked Box or Completion Accounts - What's BEST For YOU When Selling Your Business?

Locked Box vs Completion Accounts: A Small Business Owner’s Guide The Your Labrador Can Understand.

So, you've decided to sell your business, and you’re working hard with the Junction 20 content to PREPARE your business and sell for more. Awesome.

It’s your baby, your pride and joy. It's been a wild ride, from burning the midnight oil (and probably burning a few kitchen appliances) to celebrating that first sale that wasn’t to your mum.

Now, you're on the brink of passing the baton, and suddenly you're hit with terms like "Locked Box" and "Completion Accounts." If you're scratching your head thinking, "Are these types of padlocks? Do I need a key for this?", don't worry.

We're going to break it down for you, with a dash of humour to keep things light, and write it in a way a labrador will understand. Why? Because it annoys us that so many brokers and consultants use weighty text and terms in a bid to justify fees.

What on Earth is a Locked Box?

Let's start with the Locked Box mechanism, which - spoiler alert - doesn't involve actual padlocks, handcuffs or safes. Sorry to disappoint. So, keep your handcuffs for other things, moving swiftly along…

The Locked Box is a financial system used in business sales. It's all about freezing the accounts of your business at a specific date (known as the "Locked Box Date"). Think of it like a financial time capsule: you decide on a date when the accounts are "locked," and after that, you, as the seller, agree not to take out or put in any sneaky last-minute transactions.

Here’s a very relatable scenario:

• Imagine you’re selling your local bakery (you’ve made a killing with those award-winning scones).

• The buyer and you agree that on 31st March, you’ll lock the box.

• From that point on, the buyer will treat the business as though it were already theirs. No sneaky spending, like ordering yourself a new industrial oven "on the house" after the agreed date. Everything is frozen, except for regular operational stuff like paying your staff or, in the bakery’s case, buying flour (because we can’t have a flour-less bakery).

You, the seller, pocket the business’s profits up until 31st March. After that, anything the business makes or spends is the buyer's responsibility.

Locked Box: Pros and Cons

Pros:

• Simplicity: The price is fixed, no surprises.

• No ongoing haggling: Once that box is locked, there’s no need for you and the buyer to argue over receipts or sneaky post-sale adjustments.

• Predictability: Both you and the buyer know what’s happening from the get-go.

Cons:

• Trust Issues: The buyer has to trust you haven’t drained the business’s coffers before locking the box. So, no cheeky bonuses or splurges on “business” trips to the Maldives.

Completion Accounts: A Different Game Altogether

Now let’s look at Completion Accounts, which are a little more “wait and see” in nature. If a Locked Box is like agreeing on the sale price today and walking away, Completion Accounts are more like selling a house where you promise to take care of the lawn and make sure the plumbing works before handing over the keys. It’s all about settling the sale after the fact, with a bit more back and forth.

Here’s how it works:

• You agree to sell the bakery on 31st March.

• But instead of fixing the price, you and the buyer wait until after the sale to finalise the accounts.

• On completion day, the buyer wants to see what’s really in the cupboards (financially speaking). They’ll go over the business’s assets, liabilities, cash flow, and debts like a financial detective. Based on this, they’ll adjust the final price. So, if you’ve mysteriously been stockpiling sugar mountains, they’ll adjust the price downward.

Imagine this: After the sale, the buyer finds out you owe a flour supplier £5,000 (because who doesn’t need massive quantities of flour in a bakery?). They’ll subtract that from what they agreed to pay you. On the flip side, if there’s more cash in the till than expected, you might walk away with a bit extra.

Completion Accounts: Pros and Cons

Pros:

• More flexibility: The price can be adjusted after sale, depending on how the business performs up to completion.

• Fair for both sides: If your business did great leading up to the sale, you could get a higher price.

Cons:

• Complicated: You might have to go back and forth with the buyer over small financial details. Imagine explaining to them why the bakery needed a new industrial-grade coffee machine two days before the sale.

• Time-consuming: Finalising the accounts post-sale can drag on, meaning it could be months before you know how much you’re actually getting.

Which One Should You Choose?

Now comes the golden question: should you go with the Locked Box or Completion Accounts?

• If you're a no-nonsense type who likes certainty, go for the Locked Box. You can lock in a price, hand over the business, and sail off into the sunset knowing your sale price won’t change. You can plan that post-exit holiday without worrying about future financial wrangling.

• If you're someone who enjoys a flexible approach (or perhaps you think your business might outperform expectations in the months leading up to the sale), then Completion Accounts might be for you. Just be prepared for a bit more post-sale paperwork and some potential price fluctuations.

A Final Word of Advice (and a Cup of Tea)

Whichever you choose, make sure you’ve got a solicitor to help you navigate the small print. This is vital. We provide guidance and help on how to PREPARE you and your business for sale, like most in the "advisory space", we're NOT legal experts.

Selling a business is no small feat, but understanding these two mechanisms - Locked Box and Completion Accounts - can make the process smoother. And let’s face it, there’s nothing wrong with feeling like a financial wizard when you’ve grasped the difference between the two!

So, take a deep breath, have a cuppa, and get ready to sell that business like the savvy entrepreneur you are!

Would you like to discuss this further? Then let's have a chat.

What's The Difference Between An Asset Sale and Share Sale?

Mon, 23 Sep 2024 09:10:14 GMT

What's Best For You ? An Asset Sale or a Share Sale?

The Great Business Sale Showdown: Share Sale vs Asset Sale

So, you’ve decided to sell your small or micro business. Well done! You’re ready to kick back, retire, or maybe start that alpaca farm you’ve always dreamed of. But before you run off into the sunset, there’s one crucial decision to make: are you going to sell the business through a share sale or an asset sale?

Don’t worry, we’ll keep things simple, throw in some humour, and sprinkle in examples to make it crystal clear.

Share Sale: "The Whole Shebang"

Let’s start with a share sale. In this type of sale, you're basically handing over the keys to the entire kingdom—warts and all. If you’re a limited company (meaning your business is its own legal entity), you sell your shares in the company to the buyer. The buyer takes over the company, including all the good bits and the not-so-good bits—staff, contracts, equipment, debts, liabilities… everything!

It’s like selling a car. You don’t take out the engine and tyres and hand them over separately; you sell the entire car as-is, hoping the buyer doesn’t notice the squeaky brakes or that mysterious stain on the back seat.

Remember though, any buyer with a functioning brain cell will be carry out extensive Due Diligence, so be prepared for that – and guess what? We can help with that too,

Example of a Share Sale:

You own "Betty’s Bakery Ltd.", a small company you’ve been running for years. Someone’s interested in buying the bakery, so you agree to a share sale. This means the buyer is purchasing all of your shares in Betty’s Bakery Ltd., which includes the ovens, recipes, your staff, the lease for your shop, and that weird supplier contract you signed after one too many glasses of wine at a trade show.

Once the deal is done, Betty’s Bakery Ltd. is now legally owned by the buyer. You walk away with the money, and the buyer walks away with the bakery exactly as it is—including any potential legal disputes or surprise tax bills hiding in the paperwork. You’re done. Clean break.

Asset Sale: "Pick 'n' Mix"

Now, let’s talk about the asset sale. This is more like a ‘Pick 'n' Mix’ scenario. The buyer chooses specific assets they want, and only those assets. This could be your equipment, your customer list, maybe a few contracts, but not the entire business. They’re just cherry-picking the things they fancy.

The company itself remains your problem, meaning if there are any skeletons in the closet (debts, liabilities, an angry ex-employee), they stay with you. It’s like selling a house but keeping the dodgy plumbing and the leaky roof for yourself. Lucky you!

Example of an Asset Sale:

You own "Alfie’s Auto Repairs", and a buyer is interested in the equipment you’ve built up over the years—hydraulic lifts, diagnostic tools, maybe even your client list. In an asset sale, they buy these specific items, but they don’t take over the entire company.

So, Alfie’s Auto Repairs as a legal entity stays with you, and you’re still responsible for paying off any remaining debts, dealing with outstanding tax obligations, or keeping that long-term employee you didn’t really want to tell about the sale.

In this case, you sell off what the buyer wants (the assets), but you’re left to wrap up any loose ends that come with running the business. It can be more work, but it also gives you more control over what you’re selling.

Key Differences (In Case You Skimmed Everything)

1. Ownership Transfer:

o In a share sale, the buyer takes over everything—the whole business, including liabilities.

o In an asset sale, the buyer only takes what they want, while you keep the rest (including liabilities).

2. Risk to Buyer:

o In a share sale, the buyer takes on all the risks (old debts, legal issues, etc.).

o In an asset sale, the buyer can avoid taking on the dodgy parts and leave you with any baggage.

3. Tax Considerations:

o For the seller, a share sale might be more tax-efficient because you’re likely to qualify for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief), which reduces your Capital Gains Tax.

o For the buyer, an asset sale can sometimes be more attractive because they’re not taking on liabilities, but they may not get the tax benefits you would with a share sale.

Final Thoughts: Which is Right for You?

If you’re ready for a clean break, want to hand over the entire business, and are OK with transferring everything to the buyer—including any hidden headaches—then a share sale is probably your best bet.

But if you only want to sell off parts of the business (maybe to get a quick cash injection or to slowly phase out), and you don’t want the buyer touching your dodgy contracts or that employee who still hasn’t figured out how to work the photocopier, then an asset sale could be the way to go.

Just remember, whichever route you choose, it’s ESSENTIAL to get a lawyer on board. They’ll help make sure you don’t accidentally sell your prized collection of company pens or forget about that unpaid tax bill from 2018.

Good luck with your sale—and here’s to that future alpaca farm!

Why Is My Business NOT Selling?

Fri, 28 Jun 2024 06:34:19 GMT

Why Can't I Sell My Business?

Why Is My Business Not Selling?

Are you wondering why your business isn't exactly the next big thing?

Do you feel like you're selling artisanal ice to Eskimos? Fear not, dear entrepreneur! You’re not alone. Many small businesses find themselves in the same leaky boat, paddling frantically without going anywhere.

Let’s dive into ten possible reasons your business might be floundering, and hopefully, we'll add a sprinkle of humour to lighten the load.

First of all, you’re not alone, sadly. In the UK, 80% of businesses listed NEVER SELL. It’s not because they are bad businesses, it’s down to lack of preparation.

Here’s some pointers to avoid being on the wrong side of that statistic.

1. Your Product is a Secret

Your product is fantastic, but nobody knows about it. Are you running a business or a covert operation? If your marketing strategy involves whispering about your product in dark alleyways, it’s time to rethink. Shout it from the rooftops (or at least post it on social media)!

Never assume because your amazing product is awesome to you that everyone else knows what it does. A potential buyer will be excited by a business with a solid, clear and exciting product range or offering.

2. Website Woes

Your website looks like it was built in the '90s by a time traveller from the '80s. If your customers need a magnifying glass to read the text or a map to navigate, you’ve got a problem. Update your site and make it as user-friendly as an ATM. For a website LESS is MORE.

As Donald Miller told us in that amazing book, “Building a Storybrand” – “If you CONFUSE, you LOSE”. A potential buyer WILL be put off with a business that’s not digital “savvy” – WORSE still, they will SEE this long before you know they exist.

3. Social Media Ghost Town

Your social media presence is quieter than a library at midnight. If your last tweet was about the Y2K bug, it’s time to get with the times. Engage, post regularly, and remember: cat memes aren’t always a good idea. A potential buyer will not be jumping over hurdles to buy a business that is in the “Digital Dark Ages”.

4. Pricing Like a Picasso

Your pricing strategy seems to follow the logic of modern art: nobody understands it. Are you charging too much or too little? Either way, your pricing should make sense to your customers and reflect the value they’re getting.

Remember, you're selling products, not confusion. As well as pricing, a potential buyer will be looking at the systems and structure you have for monitoring profit and margins. A “finger in the air” pricing policy excites no one – in fact, it could lead to the wrong finger being in the air!

5. Customer Service? What’s That?

Your customer service is as friendly as a grumpy cat on a Monday. If your response time to customer inquiries can be measured in geological epochs, it’s time to up your game. Be prompt, be polite, and maybe even add a smiley face or two.

Do you have “barriers” that make it more difficult to do business with you than it should. 95% answer NO, funny thing, but 95% actually DO. Yes, even in 2024 some businesses are “Cash Only” – that sign should read “GO AWAY”.

Every potential buyer will be doing a lot of digging here. Small businesses live or die, thrive or dive, based on Customer Service and Reviews. Good is no longer good enough.

6. Ignoring Feedback

Your customers’ feedback is more valuable than gold-plated bitcoin. If you're treating it like spam mail, you’re missing out on insights that could turn things around. Listen to your customers; they might just have the secret sauce to your success.

Expect a potential buyer to walk, or perhaps run, if you haven’t got a good feedback loop. We always suggest before selling, conduct a Net Promotor Score (NPS) – this is GOLD in the eyes of a buyer.

7. Branding Blunders

Your branding is about as cohesive as a cat wearing a tuxedo. If your logo, colors, and messaging are all over the place, customers won’t know what to make of you. Create a consistent brand image that tells your story clearly. Branding is NOT just for the “big boys” – branding is for life, not just Christmas.

This is what we call a “Hidden Objection” or a “Silent Objection”, it’s where a sub-conscious decision is made. The potential buyer doesn’t “feel right”, there’s something not exciting them, but they just can’t put their finger on it. A poor brand strategy is guaranteed to do that.

8. The Location Lottery

Your business is located in the middle of nowhere. Unless you’re selling desert survival kits to stranded travellers, you might want to reconsider your location. Be where your customers are, not where the tumbleweeds roam. Be seen, be visible, be noisy, be consistent, be relevant, be everywhere. Today, EVERY business can and SHOULD be visible.

Today, though, a good location can be a prime slot on Google. A strong position on Amazon. A busy store on ETSY. A busy, vibrant website.

9. The Valuation Expectation

Your business has a value, every business does. There are many ways to improve and INCREASE that value, however, your Jam Doughnut business with a turnover of £45,000 and a net profit of £8000 is unlikely to be worth £1m.

Sure, the broker may tell you that as they take an UPFRONT fee. We’ll guide you on THREE valuations. 1) What the business is worth today. 2) What the business could be worth with a bit of effort. 3) What the business could be worth with some serious effort and planning. The choice is yours.

A business is worth what a genuine buyer is willing to pay for it. An excited, motivated and impressed buyer will pay a premium.

10. The Desirability Factor

Your business is your baby, and no one likes to hear their baby is ugly. However, by creating DESIRABILITY and showing a potential buyer what your baby is REALLY capable of, well, now we’re off to the races. FEW businesses do this. We call this GROWTH POTENTIAL, and it is good.

This isn’t a flight of fantasy, or figures pulled from La La Land, Growth Potential focusses on real opportunities and used a module called T.A.M, S.AM. and S.O.M to illustrate market and growth opportunities.

99% of buyers will acquire a business with a view to increasing and improving that business, give them the blueprint for that.

So, there you have it! If your business isn’t selling, one (or more) of these culprits might be to blame. Remember, Rome wasn’t built in a day, and neither is a successful business. Tweak, adjust, and most importantly, keep your sense of humour. After all, entrepreneurship is the ultimate rollercoaster – just hang on tight and enjoy the ride!

Would you like a no obligation, no waffle, no cons, no gimmicks, no CHARGE business evaluation and valuation? Drop us a message and we'll make that happen.

Can You Sell A Self-Employed Business?

Thu, 13 Jun 2024 07:33:18 GMT

Can You Sell A Self Employed Business?

Can You Sell A Self Employed Business?

The Mighty Micro Business: Small but Mighty in Value

Why Small Is The NEW Big

Running a micro business in the UK is like being the captain of a tiny, one-person ship navigating the vast, unpredictable seas of entrepreneurship. You might not have a crew, but that doesn't mean your ship isn't valuable—or saleable. In fact, your micro business could be the hidden treasure a savvy buyer is searching for.

So, grab a cuppa, sit back, and let’s dive into the world of mighty micro businesses. YOUR mighty micro business.

In the UK it is estimated that there are 5.6 million businesses – wow, that’s huge. Of those 5.6m, 74%, yes nearly THREE QUARTERS, 4.1m are NON EMPLOYING.

Yet, bizarrely, the vast majority of M&A professionals, brokers, sales agents and consultants are NOT interested in helping micro business owners prepare their businesses for sale. Why? They will tell you micro businesses, or “one person businesses” are NOT sellable. They are, let’s be clear on that.

That’s their code for “we don’t get a big enough fee”.

You’ll have to navigate and PLAN your course towards exit, and that can take a few years, it is, however, worth it. Working in your business will earn you a living, selling your business could earn you a fortune.

You may not be looking to exit now, and that’s great.

Planning, preparing and building a business that is sellable will be a wise investment for future years. The longer the plan, the better the return.

You also want to see a RETURN for those many years of hard work.

The Unsung Hero: The One-Person Band

Picture this: you’re the CEO, CFO, CMO, MD, FD, COO, and every other letter of the alphabet. You handle everything from marketing and sales to invoicing and customer service. You wear so many hats, you could open a millinery shop on the side. But guess what? That versatility and resilience can make your micro business a gem.

Sure, you might not have the luxury of a fancy office or a team of minions - I mean, employees - to delegate tasks to, but your business is streamlined, efficient, and oh-so-personal. Every touchpoint with your customers has that unique "you" flair. And that’s precisely what makes your micro business valuable.

Buyers are looking for that kind of authenticity and direct connection with customers. It's like finding a unicorn in the middle of a crowded horse race.

When you “systemise” and structure your business to deliver all that with consistency and quality, now we’re off to the races, and in pole position too.

Value Beyond Size: Why Small is the New Big

1. Nimbleness: While big corporations are like gigantic cruise ships needing miles to change direction, your micro business is a sleek speedboat, agile and quick to pivot. When market trends shift, you’re already there with the next big thing. Potential buyers love this flexibility.

2. Personal Touch: Your business isn’t just a number on a spreadsheet; it’s a story. Customers buy into that story. They know they get the personal touch, and that relationship is pure gold. Buyers see this as a major asset because, in a world dominated by faceless giants, a personal connection is rare and precious.

In a transition phase, with the right business systems and processes, that is easily transferrable to a new, passionate owner. Think of your business as a very powerful desktop computer. All that hardware and power stays, all you’re doing when selling and transferring to another owner is “switching the motherboard”

3. Lower Overheads: No need to worry about office politics, water cooler gossip, or who's been nicking the last biscuit. Your costs are minimal, and your profit margins can be surprisingly healthy. Savvy buyers recognise this efficiency. Then we add a secret ingredient called “Growth Potential”, and the force is strong with that one.

Selling Your Business: The Art of Making It Irresistible

So, how do you sell this one-person marvel? Here’s the playbook:

1. Polish Your Financials: Even if numbers make you want to hide under your duvet, it’s time to get cozy with them. Clean, clear financial statements showing consistent revenue and growth will make potential buyers swoon. Think of it as giving your business a nice scrub up and a fresh set of clothes.

2. Growth Potential: You have spent many years running your business the way YOU want. There will, almost certainly, be MANY areas that offered growth opportunities that you didn’t want to embrace, that’s okay, in fact, that’s GOOD. This is what we call Growth Potential, you showing a prospective buyer the full potential of what THEIR new business could REALLY achieve – now we have ourselves a ball game.

3. Highlight Your Differentiator: What makes your business stand out? Whether it’s your unique products, stellar customer service, or that secret sauce only you know, make sure buyers understand what sets you apart from the crowd. Why do customers use you, what makes your business really stand out in a crowded and NOISY marketplace?

4. Create a Transition Plan: Buyers might be worried about taking over a one-person operation. Ease their minds with a solid transition plan. Offer training sessions, document your processes, and be available for consultations post-sale. It’s like handing over a well-oiled machine instead of a pile of random parts.

5. Market the Lifestyle: You’re not just selling a business; you’re selling a way of life. Highlight the freedom, flexibility, and satisfaction of running a micro business. It's not just about the money—it's about the joy of being your own boss and the potential for future growth. This is where the systems and processes are KEY. A well oiled, desirable, well structured business has real value. A chaotic, non systemised business is nothing more than a job and is highly unlikely to sell.

6. Outsource: A well structured micro business will outsource many tasks such as admin, finance and accounts, and perhaps marketing. This leaves them more time to devote to working on their core tasks that deliver PROFIT.

80% of businesses listed for sale NEVER SELL. Not because they are not good businesses, but because they don’t action the points we’re outlining.

The Bottom Line: Small Can Be Huge

Remember, just because your business is small doesn’t mean it’s not valuable. In fact, your micro business’s simplicity, flexibility, and personal touch can make it incredibly attractive to the right buyer. So, polish up that gem, tell your story, and get ready to pass the baton. Who knows? Your little ship might just sail into a big, lucrative horizon.

And if all else fails, there's always that millinery shop idea. After all, you’ve got enough hats to start with!

What’s next? Drop me a message and we’ll have a “Mighty Micro” chat around your exit goals and ambitions. I’ll leave you with a number of key ideas to really help you move forward, and there’s no charge for that.

When Is The Best Time To Sell My Business?

Sun, 02 Jun 2024 12:37:56 GMT

When Is The Best Time To Sell My Business?

I am considering selling my small business when is the right time to sell?

When is the right time to sell my business?

That’s a question I get asked a lot.

There are many factors that will influence the “best time”, assuming of course that “the best time” is actually code for GETTING MORE FOR MY BUSINESS.

If you don’t want to read the whole article, then the short answer is simple. The best time to sell your business to maximise the sale price is when both YOU and the BUSINESS are READY , and not a second before.

Many assume it’s when the economy is booming. That may be a factor for some, however, a business that is chaotic will sell for LESS in boom times than a business that is well structured selling in a recession.

Deciding when to sell your small or MICRO business is a critical decision that can significantly impact the financial return and the future of the business. Here are key factors to consider when determining the right time to sell your business:

1. Business Performance

Sell when the business is performing well: Buyers are more likely to pay a premium for a business that is profitable, has steady revenue growth, and shows strong future potential. A solid track record of financial performance makes the business more attractive.

Our advice here is to complete our “Growth Potential” module and create the “Desirability” that is guaranteed to get a potential buyer excited.

2. Market Conditions

Favourable market conditions: Economic conditions, industry trends, and market demand play a crucial role. Selling during an economic boom or when your industry is thriving can result in a higher valuation.

Conversely, selling during a downturn can mean a lower sale price.

However, as previously mentioned, a chaotic business will NOT sell for a premium even if the economy is growing faster than a tomato plant in a Saudi Greenhouse.

3. Personal Readiness

Personal goals and readiness: Your personal situation is a major factor. Consider your long-term goals, health, retirement plans, and whether you feel ready to move on. Burnout can affect the performance and growth potential of the business.

Many business owners fail to take account of the “lifestyle expenses” the business affords them. When planning your exit, the day after the sale your monthly income from that business is likely to be £0.00.

Have you factored that into your plans and exit price? Surprisingly, many don’t.

4. Strategic Timing

Strategic business milestones: Selling after achieving significant milestones (e.g., launching a new product, expanding into new markets) can enhance the value of your business.

Buyers may be willing to pay more for a business that has reached important growth stages.

This is where our “Growth Potential” module is invaluable as it helps you plan, forecast and share the full growth POTENTIAL of your business. This is what we refer to as “Desirability”, and it’s a HUGE factor on the price you’ll get for your business.

5. Financial Planning

Financial considerations: Understand the tax implications of selling your business. Consulting with financial advisors and tax professionals can help you plan the sale in a way that maximises your financial benefit and minimises tax liabilities.

Be aware that what mitigates your tax liability may affect the buyers tax position, so make sure the financial and tax structure is discussed and agreed as early in the negotiation as possible.

6. Succession Planning

Succession or transition planning: Having a solid plan for transitioning the business to new ownership can make your business more appealing to buyers.

This includes having key management in place who can continue running the business smoothly.

Micro businesses and solopreneurs would rely heavily on a combination of systems and processes and key outsource partners.

7. Competitive Landscape

Competitive advantage: If your business has a strong competitive position, such as unique products, loyal customers, or proprietary technology, it may be an opportune time to sell. Buyers look for businesses with strong differentiators in the market.

We also refer to this as “Pricing Authority”. When you are the expert in a particular field, you’ll never be the “cheapest”.

8. Buyer Demand

Buyer interest: High buyer interest in your industry or type of business can create a seller’s market, where you can negotiate better terms and a higher price.

9. Valuation Trends

Business valuation trends: Track how businesses similar to yours are being valued and sold. If valuations are high, it might be a good time to sell to capitalise on favourable market conditions.

Remember though, the business must be well structured and READY to sell to maximise this opportunity.

Consider your “Growth Potential” and “Desirability” too, if there are several businesses for sale in your industry, make sure you are REALLY standing out from the crowd.

10. Emotional Detachment

Emotional readiness: Emotional attachment to your business can cloud judgment. Ensuring that you are emotionally prepared to sell and move on can make the process smoother and decisions more rational. One element we ALWAYS suggest you adopt is the “STOP FIGURE” – the absolute lowest figure that you’ll accept.

During Due Diligence DO NOT allow the buyer to negotiate below that figure. In the cool light of day, with no emotional drivers, you agreed this was the LOWEST acceptable figure – do not let emotion drive you below that.

This is a HUGE factor in business owner REGRET after exiting.

Summary

The right time to sell your business is a blend of personal readiness, strong business performance, favourable market conditions, creating growth potential, showing DESIRABILITY, and strategic planning.

We’ll guide you through all this for FREE , you don’t need to be a client.

80% of businesses listed for sale NEVER SELL. That’s tens of thousands of business owners that have invested a significant portion of their LIFE into a business and never get that “final pay day” – we don’t think that’s right – DO YOU?

Would you like to have an initial chat? Message us here .

A Humourous Guide To Exit

Mon, 05 Feb 2024 07:41:59 GMT

A Humourous Guide Towards Preparing For A Profitable Business EXIT...

Exiting your business and PREPARING for it is a serious subject. Here's a "lighter touch" on what we see as the top 20 factors that limit both your opportunities to sell and selling price you ultimately receive.

Junction 20 was created to improve your DESIRABILITY , making your business look more attractive in the eyes of a potential buyer. Too many businesses look at the past and present when selling, they forget the POSSIBLE , and that's what your buyer is looking for.

Here's our top twenty, enjoy...and the good news - Junction 20 makes all this, and more, go away. These are the OBVIOUS factors that limit a sale, what about the less obvious ones? Have a call with us and we'll highlight what the less obvious factors are, and how to build the DESIRABILITY that a buyer wants.

Dodgy Financials:

If your financial records look like a spider web spun by a caffeinated arachnid, potential buyers might hesitate. No one wants to untangle a financial web – not even Spider-Man.

Outdated Technology:

If your computers are so old they still run on steam, it might be time for an upgrade. Buyers don't want to invest in a business that's still sending faxes and playing Snake on their Nokia 3310.

One-Man Band:

If you're the heart, soul, and janitor of your business, it can be a red flag. Buyers might wonder if they're purchasing a business or adopting a very demanding pet.

Cramped Quarters:

If your office is so small that turning around requires a 27-point turn, it's not exactly a selling point. A bigger space could mean more room for success, or at least for a game of office chair racing.

Mysterious Market Presence:

If your business is about as well-known as a B-list celebrity's pet iguana, you might have a branding issue. Buyers want to invest in something with a reputation, not a business that could be mistaken for a secret government experiment.

Legal Limbo:

If your business is wading through a swamp of legal issues, it's not exactly a selling point. No one wants to buy a business and inherit a legal saga – it's like adopting a kitten and discovering it comes with a team of lawyers.

Employee Revolving Door:

If your staff turnover is so high that you've considered installing a revolving door, it's a problem. A stable team is an asset; constant new faces can make your business look like a reality TV show with a confusing casting strategy.

Social Media Ghost Town:

If your social media presence is so quiet that a tumbleweed wouldn't even bother rolling through, it's time to spice things up. Buyers want a business that knows how to tweet, not one that sends messages by carrier pigeon.

Dinosaur Marketing:

If your marketing strategy involves carrier pigeons, smoke signals, and messages in a bottle, you might be behind the times. Buyers want a business that can navigate the digital jungle, not one stuck in the marketing Stone Age. “We’ve always done it that way”... oh dear!

Uninspiring Branding:

If your logo looks like it was designed by a sleep-deprived squirrel with a crayon, using Donald Duck Paint Studio 5, it's not helping your cause. Buyers want a business that looks good on paper – not one that looks like a toddler's art project.

Inventory Graveyard:

If your shelves are packed with products that have been collecting dust since the '90s, it's not an ideal sales pitch. Buyers want inventory with a future, not items that could be considered artifacts in an archaeological dig.

Tech Time Warp:

If your website is so ancient it asks users for their ICQ number, it's time for an update. Buyers want to purchase a business, not a digital time capsule. Maybe you’ve “we’d” all over your website too, YUCK! We did this, we do that, we have these awards, we have been established since 1972. Get the picture?

Invisible Online Reviews:

If your online reviews are rarer than a unicorn sighting, it might be time to encourage some feedback. Buyers want to know your business is loved, not that it's a secret society with a "hush-hush" policy.

Tax Troubles:

If the taxman is knocking at your door more often than the pizza delivery guy, it's a problem. Buyers want a clean financial slate, not a business that sees HMRC as a pen pal.

Unicorn Expenses:

If your expense reports look more like a fantasy novel than a balance sheet, it's time to rein it in. Buyers want to invest in a business, not finance a quest to find the mythical land of Endless Budgets.

Neglected Customer Service:

If your customer service is slower than a snail with a hangover, it's not winning any awards. Buyers want happy customers, not a hotline that plays elevator music for hours on end.

The Silent Sales Person:

If your follow up process, or lack of it, resembles a silent movie from the 20's (1920's that is), then you’re leaving thousands on the table...your competitors table that is. Be less Laurel and more Hardy.

No Plan B:

If your business plan is about as solid as a Jenga tower missing a few blocks, it's risky. Buyers want to invest in a business with contingency plans, not one that collapses with the first unexpected breeze.

Social Media Oversharing:

If your business's social media strategy involves oversharing to the point where followers know your dog's middle name, it might be time to dial it back. Buyers want professionalism, not a daily soap opera in 280 characters or less.

Bad Blood with Competition:

If your business rivalry is more intense than a Shakespearean tragedy, it's not a selling point. Buyers want a business that competes, not one that's starring in a never-ending feud episode of a reality TV show.

The factors driving you to EXIT could also be DEVALUING your business.

Tue, 02 Jan 2024 11:45:50 GMT

The Symbiosis of Exit Drivers and Business Devaluation: Unraveling the Intricate Dance

For many business owners 2024 will be a year of optimism and progression. For others, perhaps a time to focus on exiting their business. In a follow up to our previous blog on " Push and Pull Factors " we're highlighting that the factors DRIVING you towards an exit could potentially be the very same factors that will PREVENT it, or at least limit your exit possibilities.

Before considering offering your business for sale, remember that 80% of businesses listed never sell ... there's a reason for that. It's what many business brokers refrain from highlighting as they seek an upfront fee.

In the dynamic landscape of entrepreneurship, the decision to exit or sell a business is a complex and often emotionally charged process for business owners. It may come as a surprise, the very factors that propel business owners toward the exit door are often the same issues that contribute to the devaluation of their businesses. In this article, we will delve into the symbiotic relationship between exit drivers and business devaluation , exploring real-world examples to shed light on the intricate dance that unfolds in the world of business ownership.

Market Changes and Adaptability:

Businesses are constantly navigating the ebb and flow of market dynamics, more so today than ever. The world is moving at the fastest pace it ever has, and the slowest it ever will . The inability to adapt to changing market conditions is a prominent factor driving business owners to consider an exit strategy. For instance, consider a traditional brick-and-mortar furniture retailer that failed to embrace e-commerce trends. As consumer preferences shifted towards online shopping, the furniture retailers revenues dwindled, prompting the owner to contemplate an exit. Simultaneously, the business's resistance to change contributed to its declining value.

Technological Obsolescence:

In today's fast-paced technological landscape, businesses must stay ahead of the curve to remain competitive. Failure to adopt or invest in emerging technologies can quickly render a business obsolete. Kodak serves as a poignant example. Despite being a pioneer in the photography industry, Kodak's reluctance to embrace digital photography led to a decline in its market share and, eventually, bankruptcy. The same technological inertia that drove Kodak towards an exit also devalued the company as investors lost faith in its ability to stay relevant.

Leadership Challenges:

The strength of leadership within a business is often a pivotal factor in its success or failure. Issues such as poor management, internal conflicts, or the lack of a succession plan can drive business owners to seek an exit strategy. A classic example is the case of Uber, where a series of leadership controversies, including allegations of workplace misconduct and the absence of a clear leadership succession plan, contributed to the departure of its founder and CEO. The ensuing turmoil impacted the company's valuation negatively.

Financial Mismanagement:

Sound financial management is the bedrock of a thriving business. When businesses face financial challenges, owners may seek an exit to mitigate personal losses. Enron, once considered a powerhouse in the energy sector, collapsed due to financial mismanagement and accounting fraud. As the financial scandal unfolded, Enron's value plummeted, and stakeholders scrambled to salvage what remained. The same financial mismanagement that led to Enron's downfall concurrently eroded its market value.

Erosion of Customer Trust:

Customer trust is a precious commodity that, once lost, is challenging to regain. Businesses facing scandals, ethical dilemmas, or consistent product/service failures may witness a mass exodus of customers. In the case of Volkswagen, the emissions scandal in 2015 severely damaged the automaker's reputation. While the company faced legal repercussions, its market value also suffered as consumers and investors alike lost faith in the brand.

In today's Social Media world where every element of our business is under the microscope a hard earned reputation over many decades can be tarnished, or even destroyed, in as many minutes.

Conclusion:

The intricate dance between exit drivers and business devaluation underscores the interconnected nature of business decisions and outcomes. Recognising these interdependencies is crucial for entrepreneurs and business leaders seeking to fortify the foundations of their enterprises. By proactively addressing challenges and embracing change, business owners can not only avert the need for an exit strategy but also enhance the long-term value and resilience of their businesses in the ever-evolving marketplace.

The Junction Twenty programme was created to allow business owners to PREPARE themselves and their business for a profitable exit. It's NOT designed for quick exits or distressed sales. Let us show you HOW this works, we're confident you'll be a little more than impressed.

Let's have an initial chat ?

TAM, SAM and SOM

Fri, 13 Oct 2023 07:52:12 GMT

What is TAM, SAM and SOM?

TAM, SAM and SOM are your three best friends when it comes to growing, scaling and exiting your business. This allows you to look at your total marketing opportunities, perhaps in a way you have NEVER done before.

We are often asked; "Can you explain, in simple terms, what is referred to with TAM, SAM and SOM?" - Okay here goes...

TAM, SAM, and SOM are acronyms often used in business and marketing to help companies understand the size and potential of a market for their products or services. Let me explain each one in simple terms:

TAM (Total Addressable Market):

TAM represents the total or overall market opportunity for a specific product or service. It's the maximum potential revenue a company could generate if it captured 100% of the market, assuming there were no limitations or restrictions.

Think of TAM as the entire pie; it includes everyone who could potentially buy what you're offering, regardless of whether they currently do or not.

It will be a BIG pie, it can however be a very tasty pie.

SAM (Serviceable Available Market):

SAM is a smaller subset of TAM, and for many this is where the real growth opportunities are. Remember, when you're planning an exit a potential buyer is going to be excited by potential growth opportunities - this is where the growth potential lives and breathes.

You may not want to expand, however you want to share the POTENTIAL with a prospective buyer. It represents the portion of the total market that a company can realistically serve or target with its products or services.

SAM considers factors like geography, customer segments, and other constraints that limit a company's reach. Think of it as the slice of the pie that you can actually reach and serve effectively. It's still a big tasty pie though...

SOM (Serviceable Obtainable Market):

SOM is an even smaller portion of the market compared to SAM. It represents the share of the market that a company can realistically capture or obtain. This is often referred to as the "low hanging fruit". Without expanding into new markets or areas, a focus on SOM can quickly return an impressive growth rate.

Businesses looking to exit should focus on their SOM immediately. What opportunities are being missed?

SOM takes into account the competition, marketing strategies, and the company's capabilities. Think of it as the slice of the pie that you can realistically grab and make your own. This is the tasty part of the pie because it's already on YOUR plate... just waiting to be eaten!

Summarised TAM, SAM and SOM

In summary, TAM is the entire market opportunity, SAM is the part of the market you can realistically serve, and SOM is the portion of the market you can realistically capture. These concepts help businesses focus their efforts and resources on the most achievable and profitable segments of the market.

This is essential for business owners looking to improve prior to an exit. In reality, these improvements would be planned and implemented for a longer term exit.

Can you explain further and give some examples of TAM, SAM and SOM

Okay - Let's dive deeper into these concepts and provide some examples for better understanding.

Total Addressable Market (TAM):

Definition: TAM is the total, hypothetical market for a product or service. It represents the broadest view of the market size, assuming there are no constraints, and every potential customer is included.

Example: Imagine a company that produces virtual reality gaming headsets. Their TAM would include every person on the planet who might be interested in gaming, regardless of whether they currently own a headset or not. So, the TAM would be billions of people worldwide. Phew, that's a lot of pie, even for me!

Serviceable Available Market (SAM):

Definition: SAM is a subset of TAM. It narrows down the potential market by considering factors like geographic location, demographics, and other limitations that affect the company's reach.

Example: Continuing with the VR headset company, their SAM might be limited to, let's say, the United Kingdom. This is because they might not have the resources to market and distribute their product globally or European wide at the moment. So, their SAM would be the gaming enthusiasts in the UK. Nice pie, still plenty of it though.

Serviceable Obtainable Market (SOM):

Definition: SOM is an even smaller portion of the market that a company realistically expects to capture. It takes into account competition, marketing strategies, and the company's capabilities.

Example: For the VR headset company, their SOM might be a percentage of the SAM they can reasonably expect to convert into customers. Let's say they believe they can capture 5% of the UK market within the next two years. That 5% would be their SOM. Can you see where their growth potential comes from?

In this example:

TAM is the entire global gaming market.

SAM is the portion of the market within the UK

SOM is the specific percentage of the UK market (5%) the company plans to capture.

Understanding these concepts helps companies make realistic business plans, allocate resources efficiently, and set achievable goals. It also guides their marketing and product development efforts toward the most promising segments of the market.

What else is relevant to TAM, SAM and SOM

Several other factors and considerations are relevant to TAM, SAM, and SOM analysis:

Market Segmentation: It's crucial to divide the market into segments based on various criteria like demographics, geography, behaviour, or psychographics. Each segment may have a different TAM, SAM, and SOM, and companies need to tailor their strategies accordingly.

Market Trends: Monitoring industry trends, emerging technologies, and shifts in consumer behaviour can impact the TAM, SAM, and SOM over time. Staying up-to-date is essential for adapting strategies.

Competitive Analysis: Understanding the competitive landscape is vital. Knowing who your competitors are, their market share, and their strategies can help refine your estimates of SAM and SOM.

Market Growth: Assessing the overall growth rate of the market is important. A growing market can offer more opportunities for capturing a larger SOM over time.

Barriers to Entry: Consider factors that might limit or facilitate entry into the market, such as regulatory requirements, intellectual property, distribution channels, or capital requirements.

Customer Needs and Preferences: Understanding what customers want and how they make purchasing decisions can help target the right segments within SAM and SOM effectively.

Marketing and Sales Channels: Determine the most effective channels for reaching your target audience within SAM and SOM. This may include online advertising, social media, partnerships, or physical retail locations.

Resource Allocation: Companies should allocate resources (budget, personnel, time) based on the size and potential of their SOM. A larger SOM might justify a larger marketing budget or more extensive sales efforts.

Market Entry Strategy: Companies need to develop a clear strategy for entering and expanding within their SOM. This could involve pricing strategies, product differentiation, or geographic expansion plans.

Tracking and Measurement: Continuously track and measure progress against the SOM. Adjust strategies as needed based on performance and market changes.

Risk Assessment: Consider potential risks and uncertainties that could affect your ability to capture the expected SOM, and have contingency plans in place.

Customer Feedback and Iteration: Gathering feedback from customers within your SOM can help refine products or services and improve your market position.

In essence, TAM, SAM, and SOM are not static figures but dynamic concepts that require ongoing analysis and adaptation as market conditions evolve. Successful businesses regularly review and adjust their strategies to maximise their share of the market.

Phew, and that is TAM, SAM and SOM - your three new besties. This is just one of the twenty modules that Junction Twenty uses to help you plan, prepare and enjoy and successful exit and get MORE for your business.

Would you like to know more - let's have a chat ...

Exit Your Business Without Exiting

Fri, 18 Aug 2023 07:08:05 GMT

Exiting Your Business Without Exiting.
Avoid being part of the 75% of business owners that regret exiting within a year.

What Is Meant by “Exit without Exiting”?

This article was written to challenge those considering selling their business with this one question. “What are you REALLY selling?” What are you REALLY exiting? Is it the business you have built up over many years, or is it the current pain, hassle, stress, and anxiety that your baby has created?

If it’s the latter, allow me to be BLUNT – you’re exiting for the WRONG reasons, yet for you, at the moment, they appear to be the right reasons. This is why 75% of business owners go on to REGRET selling their business. When the pain is gone, so has your BUSINESS.

Let’s look at this in a bit more detail now…

This Blog post is relevant to two others that you should also read; “ Why Do So Many Business Owners Regret Selling ?” and “ Push and Pull Factors When Selling A Business – WHAT ARE THEY? ”

Selling your business is a huge emotional decision , way more than starting the business ever was.

This is potentially a LIFE time of investment, or a significant portion of your life. While every business should have an exit path defined, that exit path must be clear and not based on PUSH factors. Factors and influences within the business that are PUSHING you out of YOUR business and perhaps into a sale that will lead to regret later.

When we refer to “ Exit WITHOUT Exiting ”, this is where you work on those PUSH factors and eliminate them. Get your business to run efficiently and effectively without you. In other words, prepare your business for sale so you don’t need to. When you reach that stage, you know you’re exiting for the RIGHT reasons.

How is it possible that so many businesses allow themselves to be “Pushed” away from their business?

We see a lot of businesses that are NOT in a good place. Business is tough; therefore, life is tough. There’s a lot of overwhelm, stress, and hassle. You could argue that’s just “part of business”; however, it’s been going on for many years and perhaps influenced further by family or financial pressures. Look at our PUSH factors blog; there may be some, or many, you can relate to. List them – ACT on them.

You just want the pain to stop . You want the hassle to go away, and the grass always looks greener on the other side of the fence. It rarely is, long-term anyway.

The business is then sold, which almost certainly means below the POTENTIAL value.

It’s not been a distressed sale; however, you could say more of a “de-stressed sale”. The valuation of the business will have been affected as you were perhaps heavily involved in many of the day to day decisions, the business structure may not have been robust, and maybe the accounts and recent profits were not that exciting.

Great reason TO SELL the business, right? WRONG . It’s a great reason to IMPROVE . Prepare your business for sale; whether you do or not is almost irrelevant.

Exiting WITHOUT Exiting. This will not suit every business owner; however, it’s an option to consider before committing to a decision that could lead to regret. This process is summarised as follows:

Remind yourself why you went into business in the first place. What was the dream? What was the vision? What is the reality currently? Has that dream become a bit faded?

1. Who allowed that to happen?

2. What are the PUSH factors that are driving you from your business? List these and carefully analyse the root cause. Then ask yourself, "If those root causes were not there, how good would my life be?”

3. What is your involvement with the business currently? Make sure all these tasks are listed and reviewed.

4. What is the profitability of the business currently, and forecast?

Let’s dive a bit deeper into “Exiting a business WITHOUT Exiting.”

"Exiting a business without exiting or selling" is a concept that suggests finding a way to step away from the day-to-day operations or responsibilities of your business without completely selling or divesting ownership of the business.

It often involves delegating tasks, restructuring the business model, recruiting management roles, or implementing changes that allow the business owner to reduce their involvement while maintaining ownership.

This requires a significant mindset shift as many business owners will use the phrases “that won’t work for my business” or “I tried that before”. EVERY business in EVERY industry can be structured to run without you; it’s YOUR decision.

Henry Ford once said, “Whether you think you can or whether you think you can’t – you’re right.”

This concept is commonly associated with entrepreneurs or business owners who want to reduce their active role in the company but still retain ownership and potentially benefit from its continued growth or success. There are a few strategies that might be used to achieve this:

1. Delegation: The owner might delegate more responsibilities to capable managers or executives, allowing them to handle the operational aspects of the business while the owner takes a more hands-off approach.

2. Restructuring: The business could be restructured in a way that allows the owner to step away from certain functions or divisions while retaining control over others.

3. Hiring Key Personnel: Bringing in skilled individuals to manage different aspects of the business can enable the owner to reduce their direct involvement.

4. Implementing Systems and Processes: Creating effective systems and processes can help the business run smoothly with less day-to-day intervention from the owner.

5. Transitioning to an Advisory Role: The owner might shift to an advisory role or consulting role, providing guidance and strategic input without being directly involved in daily operations.

6. Remote or Part-Time Management: Depending on the nature of the business, the owner might explore the option of managing the business remotely or on a part-time basis.

7. Automating Tasks: Implementing technology and automation can reduce the need for constant oversight and intervention.

The goal of exiting a business without selling is often to achieve a better work-life balance, explore new ventures, or focus on other interests while still maintaining ownership and potentially benefiting from the business's ongoing success. It's important to carefully plan and execute such a transition to ensure the business thrives even with reduced owner involvement.

There are, of course, financial implications. You may have to recruit at Director or Senior Manager level. How will that impact the business? Of course, that impact is likely POSITIVE as your well-structured and systemised business is now running like a Swiss Watch.

You may now be saying, “That’ll never work in my business”, and you are of course, 100% right , as Henry kindly pointed out in the quote above…

Let’s remind ourselves of the PUSH Factors that could be driving you toward a business exit. Junction Twenty exists to identify these, then work towards resolving them. This is NOT easy; it requires a change of thinking and a LOT of commitment.

In the context of selling a business, "push factors" refer to the reasons or motivations behind the decision to sell the business. These factors can be either internal or external and significantly influence the owner's decision to sell. Understanding these factors is crucial for the seller and potential buyers to evaluate the business's current situation and prospects.

Push Factors: These are the internal reasons that "push" the business owner to consider selling the business. Common push factors include:

Personal reasons: The owner may be nearing retirement age, experiencing health issues, or facing other personal circumstances that make them want to exit the business.

Burnout or fatigue: The owner might feel overwhelmed by the demands of running the business and want to step away.

Diverging interests : The owner's passions or goals may have shifted away from the business, leading them to seek new opportunities.

Financial challenges: The business may be struggling financially, and the owner may decide to sell to avoid further losses or debt.

Here are 20 more examples of common push factors that might lead a business owner to consider selling their business. How many can you relate to?

1. Owner's retirement or desire to step back from day-to-day operations.

2. Health issues or personal/family circumstances require more time and attention.

3. Lack of passion or interest in the industry or business model.

4. Business stagnation or lack of growth opportunities.

5. Overwhelming workload and burnout.

6. Financial difficulties, including declining profits or increasing debts.

7. Difficulty in adapting to market changes or technological advancements.

8. Disagreements or conflicts among business partners or stakeholders.

9. Inability to keep up with industry regulations and compliance requirements.

10. Strong competition and the challenge of maintaining market share.

11. Shift in market demand away from the business's products or services.

12. Ineffective or outdated marketing and sales strategies.

13. Challenges in finding and retaining skilled employees or management.

14. Declining customer loyalty and satisfaction.

15. Changing customer preferences and needs that the business can't address.

16. Unfavourable economic conditions affecting the business's performance.

17. Loss of key suppliers or disruptions in the supply chain.

18. Environmental or social factors impacting the business's reputation or operations.

19. Inadequate resources or capital to support business growth.

20. Realisation that the business model is no longer viable or sustainable.

These push factors can vary significantly from one business to another, and sometimes multiple factors might contribute to the decision to sell. Not all businesses are sold for negative reasons; some owners may also choose to sell when the business is performing well to capitalise on its success or explore new opportunities. The purpose of this blog, and this part of the Junction Twenty programme is to ensure you’re exiting for the right reasons.

We’re often asked what are examples of more personal push factors

Push factors may influence a business owner's decision to sell their business prematurely. These factors are often deeply rooted in the owner's personal life, aspirations, and circumstances. Here are some more personal push factor examples:

1. Retirement: The owner wants to retire and enjoy a more relaxed lifestyle.

2. Health Issues: The owner's health problems make it challenging to continue running the business effectively.

3. Family Obligations: The owner needs to prioritise family responsibilities or caregiving duties.

4. Career Change: The owner seeks a new career path or wants to explore other business opportunities.

5. Time Commitment: The owner desires more leisure time and less stress from managing the business.

6. Burnout: The owner is mentally and emotionally exhausted from working the business.

7. Personal Interests: The owner wishes to pursue personal passions or hobbies.

8. Relocation: The owner plans to move to a different city or country, making business management difficult.

Read our Blog post on “ Push and PULL Factors When Exiting Your Business .”

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us. Maximising the RETURN of your LIFE investment is what we're all about.

Push and Pull Factors - What Are They?

Sun, 13 Aug 2023 13:49:14 GMT

Push And Pull Factors When Exiting. What Are They?

What is meant by push and pull factors when selling a business?

In the context of selling a business, " push and pull factors " refer to the reasons or motivations behind the decision to sell the business. These factors can be either internal or external and play a significant role in influencing the owner's decision to sell. Understanding these factors is crucial for both the seller and potential buyers to evaluate the business's current situation and prospects.

This is one of the main reasons why 75% of business owners go on to regret selling their business within a year of exiting. The PUSH factors may be strong and emotionally leading the decision to exit without an appreciation of WHY .

One of the early modules we focus on is “ Decision Scoring ” to determine if your decision is based on Push or Pull factors. This Blog is c losely linked with another article; “ What Is An Exit Without Exiting ” – be sure to read that one too. Here’s the link.

Push Factors: These are the internal reasons that "push" the business owner to consider selling the business. Common push factors include:

Personal reasons: You may be nearing retirement age, experiencing health issues, or facing other personal circumstances that make you want to exit your business.

Burnout or fatigue: You might feel overwhelmed by the demands of running the business and want to step away.

Diverging interests: Your passion or goals may have shifted away from the business, leading you to seek new opportunities.

Financial challenges: Your business may be struggling financially, and you may decide to sell to avoid further losses or debt.

Pull Factors: These are the external reasons that "pull" the owner towards selling the business. Common pull factors include:

Attractive market conditions: A strong economy or a high demand for businesses in a specific industry can make selling more appealing.

Favourable valuation: If the business is performing well and has solid growth potential, the you may see an opportunity to achieve a good selling price.

Strategic buyers: If larger companies or competitors are interested in acquiring the business, you could be enticed by the potential benefits of such a deal.

Lifestyle change: You may decide the time is right to pursue a different lifestyle or investment opportunities, and selling the business can facilitate this change.

When selling a business, it's essential to communicate the push and pull factors clearly to potential buyers. Buyers will want to understand the motivations behind the sale, which can impact their perception of the business's value and future prospects. For sellers, understanding these factors helps them establish realistic expectations and navigate the selling process effectively.

Here's 20 more examples of PUSH Factors - how many can you relate to? Is your potential exit based more on PUSH Factors?

Here are 20 examples of push factors that might lead a business owner to consider selling their business:

1. Owner's retirement or desire to step back from day-to-day operations.

2. Health issues or personal/family circumstances requiring more time and attention.

3. Lack of passion or interest in the industry or business model.

4. Business stagnation or lack of growth opportunities.

5. Overwhelming workload and burnout.

6. Financial difficulties, including declining profits or increasing debts.

7. Difficulty in adapting to market changes or technological advancements.

8. Disagreements or conflicts among business partners or stakeholders.

9. Inability to keep up with industry regulations and compliance requirements.

10. Strong competition and the challenge of maintaining market share.

11. Shift in market demand away from the business's products or services.

12. Ineffective or outdated marketing and sales strategies.

13. Challenges in finding and retaining skilled employees or management.

14. Declining customer loyalty and satisfaction.

15. Changing customer preferences and needs that the business can't address.

16. Unfavourable economic conditions affecting the business's performance.

17. Loss of key suppliers or disruptions in the supply chain.

18. Environmental or social factors impacting the business's reputation or operations.

19. Inadequate resources or capital to support business growth.

20. Realisation that the business model is no longer viable or sustainable.

It's important to note that these push factors can vary significantly from one business to another, and sometimes multiple factors might contribute to the decision to sell. Additionally, not all businesses are sold due to negative reasons; some owners may also choose to sell when the business is performing well to capitalise on its success or explore new opportunities. This is why the "Decision Scoring" is such a valuable module.

Now, let's look at more examples of pull factors

Here are 20 examples of pull factors that might attract potential buyers to acquire a business. Is your decision being led by Push Factors or Pull Factors?

1. Strong historical financial performance and profitability. (prime time to exit)

2. Attractive growth prospects and opportunities for expansion.

3. Established and loyal customer base.

4. Well-recognized brand name and reputation in the market.

5. Unique and innovative products or services that have a competitive edge.

6. Strategic location or access to lucrative markets.

7. Diversified product/service offerings reducing dependency on a single revenue stream.

8. Efficient and scalable operational processes.

9. Valuable intellectual property, patents, or proprietary technology.

10. Access to a skilled and motivated workforce.

11. Favourable long-term contracts with suppliers or customers.

12. High barriers to entry in the industry, making it difficult for new competitors to enter.

13. Positive industry outlook and strong market demand for the business's products or services.

14. Potential for cost synergies with an existing business owned by the buyer.

15. Acquisition of complementary products or services to enhance the buyer's existing portfolio.

16. Acquisition as part of a strategic plan to expand into new geographic markets.

17. Opportunity to acquire key assets, such as prime real estate or valuable equipment.

18. Access to a well-established distribution network.

19. Strong relationships with suppliers or strategic partners.

20. Potential for streamlining operations and achieving greater efficiency under new ownership.

These pull factors can be compelling reasons for buyers to consider acquiring a business and can significantly impact the valuation and attractiveness of the acquisition opportunity. When selling a business, highlighting these pull factors can help attract potential buyers and facilitate a successful sale process.

Personal factors will of course have an influence on your decision making. Here are examples of more personal push and pull factors

Personal push and pull factors are more individual-specific reasons that may influence a business owner's decision to sell their business. These factors are often deeply rooted in the owner's personal life, aspirations, and circumstances. Here are some examples of both personal push and pull factors:

Personal Push Factors:

1. Retirement: The owner wants to retire and enjoy a more relaxed lifestyle.

2. Health Issues: The owner's health problems make it challenging to continue running the business effectively.

3. Family Obligations: The owner needs to prioritise family responsibilities or caregiving duties.

4. Career Change: The owner seeks a new career path or wants to explore other business opportunities.

5. Time Commitment: The owner desires more leisure time and less stress from managing the business.

6. Burnout: The owner is mentally and emotionally exhausted from managing the business.

7. Personal Interests: The owner wishes to pursue personal passions or hobbies.

8. Relocation: The owner plans to move to a different city, or country, making business management difficult.

Personal Pull Factors:

1. Financial Security: Selling the business can provide a significant financial windfall for the owner.

2. Entrepreneurial Freedom: The owner wants to explore new business ventures or invest in different industries.

3. Work-Life Balance: The owner seeks a better work-life balance and more flexible lifestyle.

4. Personal Fulfilment : The owner believes that selling the business will lead to personal fulfilment or peace of mind.

5. Legacy: The owner wishes to pass the business on to a family member or ensure its legacy in the hands of a new owner.

6. Achievement of Goals: Selling the business can help the owner achieve personal and financial goals.

7. Time for Relationships : The owner desires more time to focus on personal relationships and social life.

8. Philanthropy: The owner wants to contribute to charitable causes or social impact initiatives.

It's important to note that personal push and pull factors can be highly subjective and vary widely from one business owner to another. Each individual's unique circumstances and aspirations will play a significant role in their decision-making process regarding selling the business.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us. Maximising the RETURN of your LIFE investment is what we're all about.

How Does Due Diligence Work When Selling a Business?

Wed, 09 Aug 2023 06:30:15 GMT

What To Expect During The Due Diligence Process When Selling Your Business.

How does due diligence work in business sales? What can you expect to be asked to provide during the Due Diligence process?

Due diligence in the context of business sales refers to the comprehensive investigation and examination of a company that a potential buyer undertakes before completing the acquisition. The main objective of due diligence is to assess the company's financial, legal, operational, and strategic aspects to determine its true value and identify any potential risks or issues that might affect the transaction or the buyer's future operations.

We are often asked, "how long will the Due Diligence process take?" This will vary from business to business, and indeed, buyer to buyer. For a small business with a basic structure and simple accounts, this process could take weeks, where larger companies with a more complex structure could take many months. The one thing to be VERY clear with Due Diligence is it's the acquirer and/or their representatives that are in the driving seat. We cover this in greater detail at the end of this blog post.

Junction Twenty will cover many of the points covered in the Due Diligence helping you be prepared for what may be asked and requested.

Here's how due diligence typically works in business sales:

Preliminary Assessment: Initially, the potential buyer may conduct a high-level review of the target company's publicly available information, such as financial statements, business plans, and market data, to gauge its suitability and alignment with their strategic objectives.

Non-Disclosure Agreement (NDA): Before delving into sensitive information, the buyer and the target company usually sign a non-disclosure agreement to ensure confidentiality and protect proprietary data. Business owners need to be aware that in the Due Diligence process you will be giving away your "secret sauce". While Non Disclosure Agreements provide protection, the potential buyer cannot "unsee" or "unhear" what's been shown or discussed.

Information Exchange: The target company provides the buyer with a data room or access to a secure online platform containing a wide range of documents related to the business, including financial records, contracts, intellectual property, employee agreements, tax information, legal documents, and other relevant materials.

Financial Due Diligence: Financial experts examine the target company's financial statements, tax records, turnover, profit margins, cash flow, debt obligations, and other financial metrics to verify the accuracy of the reported figures and assess the company's financial health and stability.

Legal Due Diligence: Legal professionals review contracts, leases, licenses, litigation history, intellectual property rights, regulatory compliance, and any pending legal issues to identify potential legal risks and liabilities.

Operational Due Diligence: Operational experts assess the target company's operational processes, supply chain, technology, inventory management, human resources, and other aspects to evaluate the efficiency and effectiveness of its operations.

Commercial Due Diligence: This step involves analysing the market, competition, and the target company's positioning within its industry to understand its growth potential and market outlook. How does your business really differentiate itself in what could be a noisy and competitive market?

Management and HR Due Diligence : The buyer evaluates the key management team's capabilities, organisational structure, and overall human resources to ensure continuity and assess any potential HR-related risks. Any disputes with employees would need to be resolved before any sale progresses.

Environmental and Regulatory Due Diligence: If applicable, environmental specialists investigate the target company's compliance with environmental regulations and identify any potential environmental liabilities.

Risk Identification and Mitigation: During the due diligence process, the buyer and their advisors identify potential risks, issues, and areas of concern. They then work to determine strategies to mitigate these risks or renegotiate terms if necessary.

Valuation and Negotiation: The findings from the due diligence process often play a crucial role in determining the final valuation of the target company. The buyer may use the results to negotiate the purchase price and terms of the acquisition.

Decision-making: Based on the outcome of the due diligence process, the buyer can make an informed decision on whether to proceed with the acquisition, renegotiate the terms, or walk away from the deal. Part of the Junction Twenty "advanced" programme is to agree what your lowest acceptable offer is, to agree this in the "cool light of day".

The Due Diligence process can be an incredibly tough and lengthy process, many business owners fall into the trap of taking what can be be a significantly reduced offer simply because "they have come this far". Preparation with Junction Twenty long before Due Diligence starts minimises this risk.

Due diligence is a critical step in the business sales process, as it helps the buyer make well-informed decisions and minimises the potential for unexpected issues or liabilities arising after the acquisition is completed.

What dangers does the due diligence process pose to a seller?

While due diligence primarily serves the interests of the buyer, it can also present certain risks and challenges for the seller in a business sale. Sellers should be aware of these potential dangers and take steps to manage them effectively. Some of the dangers that the due diligence process poses to a seller include:

Leakage of Sensitive Information: During the due diligence process, the seller is required to disclose sensitive and confidential information about the company to the potential buyer. There is a risk that this information may be leaked or shared with competitors or other unauthorised parties, potentially harming the seller's business operations or competitive position. A NDA does NOT guarantee complete security.

Business Disruption: The due diligence process can be time-consuming and disruptive to the seller's day-to-day business operations. As the seller opens up its records and facilitates access to information, employees might get distracted, leading to a temporary dip in productivity. If the employees have not been advised of the potential sale, they may become suspicious at this point.

Negotiation Leverage: The buyer's findings during due diligence can be used as leverage in negotiations. If the buyer uncovers significant issues or risks, they may try to renegotiate the purchase price or other terms of the deal to their advantage, putting the seller in a more vulnerable position. Make sure you have your "Lowest Acceptable Offer" clear in your own head BEFORE the Due Diligence Process starts.

Competitor Awareness: If competitors become aware of the business sale and the due diligence process, they might take advantage of the situation to poach customers, key employees, or otherwise exploit potential vulnerabilities of the seller.

Damaged Reputation: In some cases, the disclosure of certain information during due diligence could negatively impact the seller's reputation, particularly if the information reveals past or ongoing legal disputes, regulatory issues, or other controversies.

Burden of Preparation: The seller's team must dedicate significant time and effort to prepare for due diligence, including gathering and organising relevant documents, financial records, and other information. This can be a substantial burden, especially for small or resource-constrained companies.

Uncertainty and Stress: The due diligence process can create uncertainty and stress for the seller. As the buyer conducts their investigation, the seller may be uncertain about the outcome and whether the deal will ultimately go through.

To mitigate these risks, sellers should:

1) Be selective in disclosing sensitive information and use non-disclosure agreements (NDAs) to protect confidential data.

2) Prepare in advance for due diligence by organising and reviewing key documents, addressing any known issues, and being transparent about any potential risks.

3) Engage experienced advisors to guide them through the process and help negotiate favourable terms.

4) Consider the use of exclusivity or break-up fees in the sale agreement to protect against excessive renegotiation demands.

5) Maintain regular communication with employees and stakeholders to manage any concerns or uncertainties during the due diligence process.

By being proactive and diligent, sellers can navigate the due diligence process more effectively and protect their interests during the business sale.

How long can the due diligence process take?

The duration of the due diligence process in a business sale can vary significantly depending on several factors, including the complexity of the deal, the size of the company, the industry it operates in, the level of preparedness of the seller, and the thoroughness of the buyer's investigation. In general, the due diligence process can take anywhere from a few weeks to several months. Here are some factors that can influence the timeline:

Scope and Extent of Due Diligence: The depth and breadth of the due diligence examination can significantly impact the timeline. A more extensive review covering multiple aspects of the business, such as financials, legal, operational, and commercial aspects, will likely take longer than a more focused evaluation.

Access to Information: The seller's ability to promptly provide all requested information to the buyer's due diligence team can affect the speed of the process. A well-prepared seller with organised data and documentation can expedite the process.

Buyer's Resources and Motivation: The availability of the buyer's due diligence team and their motivation to complete the process quickly can impact the timeline. Serious buyers with dedicated teams may move faster compared to those with limited resources or competing priorities.

Complexity of the Business: The complexity of the target company's operations, industry-specific regulations, and the presence of any unique assets or risks can contribute to a more prolonged due diligence process.

External Factors: External factors such as regulatory approvals or third-party consents required for the transaction may introduce additional time delays.

Negotiation and Deal Structure: Sometimes, the buyer and seller may negotiate certain aspects of the deal based on the findings during due diligence, which could add time to the process.

Market Conditions: The state of the market and economic conditions can also play a role. In a competitive market, buyers may feel the need to move quickly, while uncertain economic conditions might lead to more cautious and lengthier due diligence.

Given these factors, a straightforward due diligence process for a small business with relatively simple operations might take a few weeks , while a complex and large-scale acquisition involving a multinational corporation could take several months to complete.

It is essential for both parties to communicate openly and set realistic expectations regarding the timeline of the due diligence process. By doing so, they can ensure that the process is conducted thoroughly while avoiding unnecessary delays that might adversely affect the overall transaction.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us. Maximising the RETURN of your LIFE investment is what we're all about.

Why Do Business Owners REGRET Selling?

Tue, 08 Aug 2023 06:51:00 GMT

Why Do So Many Business Owners REGRET Selling Their Business?

Selling your business is a HUGE decision, it should be one of the happiest days of your life. It's the RETURN for what has almost certainly been many years of hard work and sacrifice. Why is that NOT the case for so many business owners?

Why do so many business owners regret selling their business. It is estimated that around 75% of business owners regret selling within a YEAR. THREE QUARTERS regret selling their business, how can that be?

(Source: data from the Exit Planning Institute .)

The regret experienced by some business owners after selling their business can be attributed to a variety of factors. While not all owners regret selling their businesses, those who do often encounter the following reasons for their feelings of remorse, or "Sellers Remorse" as it's often referred to.

Emotional attachment: Business owners often invest significant time, effort, and personal sacrifices into building their businesses. They develop a strong emotional connection to their company and its success. Selling the business can lead to feelings of loss, as it's akin to parting with something they have poured their heart and soul into. At Junction Twenty we'll guide you here as we believe this is the principal reason for regret.

Identity and purpose: Owning a business can become a significant part of a person's identity and purpose in life. Selling the business may leave them questioning their sense of self and what they should do next. It can be challenging to find a new direction or passion after divesting from a long-standing enterprise. This is why we always guide business owners to be 100% clear on what their "life after business" looks like.

Fear of the unknown: Selling a business often involves stepping into uncharted territory. Entrepreneurs may worry about what lies ahead after the sale, uncertainty about their financial future, or their ability to adapt to a new lifestyle without the day-to-day involvement in the company they built.

Financial concerns: Even if the business sale results in a substantial financial windfall, some entrepreneurs may feel anxious about how to manage or invest the proceeds wisely. The fear of losing wealth or not being able to replicate the success they had as a business owner can contribute to regret. Part of the Junction Twenty programme is on "Financial Independence" calling on our experts in Financial and Wealth Planning.

Regretting the deal itself: Some entrepreneurs might experience seller's remorse if they believe they didn't get the best deal possible for their business or if they later discover that the buyer achieved more significant success with the business after the sale. This is why Junction Twenty focusses heavily on "Scalability" as part of the Exit Process. Together we explore the businesses FULL potential, it's then for you to decide to either realise that potential or continue with the exit.

Post-sale struggles: Even after selling the business, some entrepreneurs may still need to work with the new owners during a transition period. If there are challenges or conflicts during this phase, it can add to the feeling of regret. It's VITAL to manage these expectations from the outset for both buyer and seller. Many business owners struggle to remain in "their" business after the sale concludes.

Loss of control: Selling a business means relinquishing control over its future direction. Entrepreneurs who have a strong vision for their company may struggle to watch others take it in different directions.

It's essential to recognise that not all business owners feel regret after selling their companies, this is minimised further through careful PLANNING , and an awareness of the points mentioned above

For some, selling their business allows them to pursue new opportunities, enjoy their financial freedom, or focus on personal interests and family. The experience varies significantly from one individual to another, and the extent of regret will depend on their unique circumstances and mindset.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us. Maximising the RETURN of your LIFE investment is what we're all about.

When Is A Business NOT Sellable?

Mon, 07 Aug 2023 06:58:46 GMT

When Is A Business NOT Sellable Or Difficult To Sell?

When would a business be considered Unsellable, or DIFFICULT to sell?

That's a great question, and one asked a lot. While we believe EVERY business has the potential to be sold, there are of course several factors that significantly impact the opportunities available and the eventual selling price obtained.

Here's some factor that could make a business unsellable or challenging to sell: It's NOT A Comprehensive Guide

Selling a business is a complex process that involves numerous considerations. While many factors contribute to a business's attractiveness to potential buyers, certain circumstances can render a business nearly impossible to sell. In this guide, we will explore key reasons why a business might be considered "unsellable" and provide insights into optimising its sale potential. We'll cover this in our "Initial Chat" should you want to progress further.

Poor Financial Performance: A business with consistent losses, declining revenues, or mounting debt can deter potential buyers. Demonstrating a history of solid financial performance is crucial for attracting investors and buyers. This becomes more of an influencing factor when the business has low value IP, contracts or assets.

Legal and Regulatory Issues: Businesses embroiled in legal disputes, unresolved compliance issues, or pending litigation may raise red flags for prospective buyers, making the business appear risky and unattractive.

Overdependence on the Owner: A business heavily reliant on the owner's personal involvement for day-to-day operations can be challenging to sell. Buyers often seek businesses with established processes and capable management teams in place. In our experience this is the biggest factor in limiting a businesses sale potential.

Lack of Scalability: Buyers typically seek businesses with growth potential. If a business has limited opportunities for expansion or innovation, it may be perceived as stagnant and unappealing. You're selling a business, however, first and foremost, you're selling a dream, you're selling a VISION.

Declining Market Relevance: Industries evolve, and businesses that fail to adapt may become irrelevant in the market. Outdated products, services, or technologies can discourage potential buyers looking for sustainable opportunities.

Poor Reputation and Brand Image: Negative reviews, customer complaints, or ethical issues can tarnish a business's reputation and make it unattractive to buyers who prioritise a strong brand image and customer trust.

Inadequate Documentation: Insufficient or disorganised financial records, contracts, and operational documentation can create uncertainty for potential buyers, making due diligence and decision-making difficult.

High Customer Concentration: A business heavily reliant on a small number of clients or customers is perceived as risky. Diversified customer bases are more appealing to buyers seeking stability.

Environmental and Sustainability Concerns: Increasingly, buyers prioritise businesses that align with environmental and sustainability practices. Failing to meet these expectations could limit the pool of potential buyers.

Economic Factors: External economic conditions, such as a recession or economic downturn, can impact a business's sale potential. Buyers may delay or avoid purchasing during uncertain economic times.

Our Conclusion: While every business has its unique strengths and challenges, addressing these potential obstacles can significantly enhance a business's sellability . By focusing on financial performance, legal compliance, scalability, adaptability, reputation, and other crucial factors, business owners can optimise their chances of attracting potential buyers and achieving a successful sale . This is what Junction Twenty is all about, book an initial chat with us TODAY and see if this programme is the right fit for your business.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us. Maximising the RETURN of your LIFE investment is what we're all about.

Can I Sell A Business That's NOT Making Money

Fri, 04 Aug 2023 07:22:06 GMT

Can I Sell A Business That's NOT Making Money?

It's a VERY common question and the simple answer is Yes, you can sell a business that is not making money.

Businesses are bought and sold for various reasons, and profitability is just one factor that potential buyers consider. However, selling a business that is not profitable can be more challenging compared to selling a profitable one, so expectations need to be managed.

Here are a few things to keep in mind if you're considering selling an unprofitable business:

1. Value Proposition: Highlight other assets or potential that the business may have beyond current financials. This could include a strong customer base, valuable intellectual property, strategic location, or unique products/services.

2. Documentation: Ensure you have clear and comprehensive documentation of the business's financials, operations, and any other relevant information that would be useful to potential buyers.

3. Reasons for Poor Performance: Be transparent about why the business is not profitable. Potential buyers will want to know the reasons behind the financial struggles and assess whether they can turn the business around. What may have been unprofitable activity for you may not be unprofitable for a new owner - we'll cover this is GREAT detail with you.

4. Marketing and Promotion: Emphasise any marketing strategies or potential growth opportunities that could lead to profitability in the future.

5. Negotiation: Be prepared for negotiation, as potential buyers may offer lower prices due to the business's financial situation.

6. Seek Professional Advice: Consider consulting with business brokers, accountants, or business consultants who have experience in selling businesses to get guidance and support through the process.

It's essential to manage your expectations when selling an unprofitable business, as finding the right buyer who sees the potential in the business may take time. Additionally, consider the legal and financial implications of selling, such as outstanding debts or contracts.

7. Sell The Dream: If your reason for selling and exiting is simply down to burnout or lack of ambition to progress, sell the dream of possibilities to a new, exciting and ambitious owner. This is huge factor when exiting a business and something Junction 20 explores in great detail.

Remember that every business situation is unique, and the outcome will depend on factors like market conditions, the industry you're in, and the overall economic climate.

What else could a potential buyer be interested in?

Potential buyers may be interested in various aspects of a business beyond its profitability. Here are some other factors that can attract buyers:

1. Growth Potential: Buyers may see potential for growth and expansion in the business, even if it's not currently profitable. They may have resources, expertise, or access to markets that could turn the business around.

2. Strategic Fit: The business might fit well with the buyer's existing operations or complement their product/service offerings. In such cases, the buyer may be willing to acquire the business to gain a competitive advantage.

3. Customer Base: A loyal and engaged customer base can be valuable to potential buyers. It indicates that there is demand for the product/service and that the business has built a positive reputation.

4. Intellectual Property: If the business holds patents, trademarks, copyrights, or other intellectual property rights, it could be attractive to buyers who want to acquire those assets.

5. Skilled Workforce: A well-trained and experienced workforce can be valuable, especially if the buyer operates in the same industry or region.

6. Location: A business's location can play a crucial role in its attractiveness to buyers, especially if it provides access to a particular market or has a strategic advantage.

7. Assets and Equipment: Tangible assets, machinery, equipment, and inventory can have significant value to a buyer, especially if they can be utilised for other purposes.

8. Supplier and Vendor Relationships: Established relationships with reliable suppliers and vendors can be beneficial to a buyer, reducing the transition challenges.

9. Brand and Reputation: A strong brand and positive reputation in the market can be appealing to buyers looking to enter or expand in a specific industry.

10. Patience for Turnaround: Some buyers might be willing to invest in an unprofitable business if they believe they can turn it around in the long term.

11. Synergies and Cost Savings: If the buyer can achieve cost synergies or operational efficiencies by integrating the acquired business into their existing operations, it may justify the purchase.

12. Diversification: Buying an unprofitable business in a different industry might provide diversification benefits to the buyer's existing portfolio.

13. Contracts and Accounts: Specific contracts and specific corporate accounts may be of value to a prospective buyer. Transfer of those contracts needs to be considered.

14. Recurring Revenue: A business that has recurring revenue through subscriptions and memberships can prove to be VERY attractive to a potential buyer.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us.

Maximising the RETURN of your LIFE investment is what we're all about.

What Are The Options For Exiting & Selling A Business?

Fri, 04 Aug 2023 07:06:19 GMT

What Are The Options For Exiting & Selling My Business?

When exiting a business , there are several options for selling or exiting. The most appropriate option depends on the specific circumstances of your business, your own goals and aspirations, and, of course, the market conditions. Here are some common options:

Selling the Business: Option 1 - Selling to a Strategic Buyer: This involves selling the business to another company that can benefit from its synergies or operations. Strategic buyers may be competitors, suppliers, or companies in related industries.

Option 2 - Selling to a Financial Buyer: Financial buyers, such as private equity firms, are interested in making investments in businesses with the potential for growth and profit. They may buy a majority or minority stake in your company.

Option 3 - Selling to Employees or Management: This option involves selling the business to existing employees or members of the management team. Employee Ownership Trusts (EOT) are one way to facilitate this type of sale. Current tax laws and incentives favour this type of exit strategy.

Merging with Another Business : A merger involves combining the business with another company to form a new entity. This can lead to synergies and increased competitiveness. Acquisition: In this scenario, the business is acquired by another company, and the acquired company ceases to exist as a separate entity. Many businesses are now considering acquisition as part of their longer term exit strategy. This involves acquiring smaller competitors that are perhaps not as profitable as they could be as standalone businesses, they provide a superb opportunity for businesses with the right structure and resources.

Liquidation: If the business is no longer viable or has valuable assets, liquidation involves selling off all assets and paying off debts and liabilities. After settling all obligations, any remaining funds are distributed to the owners. Our team will guide you through this step as this can be a difficult choice as you're in effect "killing your baby".

Succession - Passing on the Business to Family: Some business owners choose to pass on the business to family members, either through direct transfer or a gradual transition. This can involve a number of options for the business owner to retain partial ownership, and therefore an income stream.

Initial Public Offering (IPO): In the case of a successful and growing business, an IPO can be an option. This involves listing the company's shares on a stock exchange and going public. However, an IPO can be a complex and costly process. While there is no specific limit on turnover for an IPO some key factors that regulators and stock exchanges may consider for an IPO include profitability, market capitalisation, corporate governance, management expertise, and the company's growth prospects. When considering an IPO our Investment Expert, John Straw, can guide you on this.

Franchising or Licensing: If the business has a successful and replicable model, the owner may choose to franchise or license the brand and operations to others. Our team have extensive experience in franchising having been involved in this process several times. This is generally not viewed as an "Exit Strategy", this is more of a "Growth Strategy" that could provide a long term exit strategy.

Closing the Business : If none of the above options are viable or desirable, the owner may decide to close the business altogether. Our team will guide you on this as most businesses have some value, even if its just goodwill.

The choice of exit strategy will be influenced by factors such as the business's financial health, its market position, the owner's personal goals and timeline, and the economic environment. It's essential to consult with legal, financial, and business advisors to evaluate the best option for your specific situation. Planning well in advance and having a clear exit strategy can help ensure a smoother transition and potentially maximise the value of the business.

At Junction 20 we recommend a MINIMUM of FIVE YEARS for Exit Planning to maximise your return. This allows changes and improvements made to become visible on your "bottom line". Exit packages have been created in as little as 2-3 months , however, the longer you can plan, the higher your exit return will be.

What Else Should You Consider?

When considering exiting a business, there are several other factors that should be taken into account. Here are some additional aspects to consider:

Timing: The timing of the exit can significantly impact the value of the business. Exiting during a strong market or when the business is performing well may fetch a higher price than in a downturn. It's essential to monitor market conditions and choose the optimal time for the exit.

Legal and Regulatory Considerations: Exiting a business involves various legal and regulatory considerations, including contracts, licenses, permits, and compliance issues. Ensuring all legal obligations are fulfilled before exiting is critical to avoid future liabilities.

Business Valuation: Determining the true value of the business is crucial for setting the right price during a sale or negotiation. Hiring a professional business appraiser can help assess the company's worth objectively.

Deal Structure: The structure of the deal can vary, depending on the buyer and seller's preferences. For example, the deal might involve an all-cash transaction, instalment payments, or a combination of cash and equity.

Confidentiality: Maintaining confidentiality during the exit process is essential to prevent negative impacts on the business, such as employee uncertainty or competitors taking advantage of the situation.

Employee and Customer Considerations: The welfare of employees and customers should be taken into account during the exit process. Clear communication and planning for employee retention or customer transition are essential.

Tax Implications: Different exit strategies can have varying tax implications. It's crucial to work with tax advisors to understand the tax consequences of each option and plan accordingly to minimise tax liabilities.

Retaining Key Assets or Intellectual Property: Consider whether to retain key assets, intellectual property, or patents that may have value or future potential even if the business is being sold.

Earn-Out Agreements: In some cases, the seller may agree to receive additional payments based on the business's future performance, known as an earn-out agreement. This can help bridge valuation gaps or incentivise the buyer to grow the business.

Contingency Planning: Having a contingency plan in place in case the initial exit strategy doesn't go as planned is crucial. It ensures you are prepared for unexpected events or changes in circumstances.

Each business is unique, and the specific factors to consider will vary. Therefore, it's essential to conduct a thorough analysis and seek professional advice to make informed decisions and execute a successful exit strategy.

Have a chat with us, there's no obligation and it's 100% Confidential. Use the form here to contact us.

Maximising the RETURN of your LIFE investment is what we're all about.

What Is A Net Promoter Score?

Tue, 15 Nov 2022 18:32:00 GMT

What Is A Net Promoter Score?

In 2003 Frank Reichheld challenged conventional thinking that there was little relationship between customer satisfaction and repeat business . It almost seems impossible, it is however 100% correct.

Reichheld then created the Net Promoter Score (NPS), this would soon become the industry benchmark to gauge accurate customer satisfaction and have a significant impact on a businesses future growth, sellable value, and some say, even if the business is viable in the longer term . Businesses that regularly use NPS and are serious about the results include, Apple, FedEx, Intuit and Amazon, and of course tens of thousands of businesses just like yours.

Incredibly the NPS score is obtained by asking ONE question, and that one question is this. "On a scale of 0-10 how likely are you to recommend us to a friend or colleague" - and that's it.

Your customers scores are then identified as follows. Those who score 0-6 are classed as DETRACTORS . Customers who score 7 or 8 are referred to as PASSIVES , and those who score 9 or 10 are called PROMOTERS .

The Net Promoter Score is worked out by subtracting the number of Detractors from the number of Promoters. For the purpose of NPS, the Passives are not used.

If your business scored as follows, Promoters 35, Passives 70 and Detractors 5, your NPS score would be 35 - 5 to give an NPS Score of 30.

An NPS score in excess of 50 is considered world class , the UK average is 44.

The NPS is the shortcut to determining YOUR ultimate customer success, don't short cut the short cut. Many businesses send the NPS question themselves, or tweak the wording, BOTH are recipes for disaster .

The Net Promoter Score ONLY works if two things happen, 1) The question is not tweaked in any way 2) The NPS survey is sent from a reputable firm guaranteeing absolute confidentiality for your customers. Break those rules and the results will NOT be accurate.

Businesses that attempt their own "NPS" fail to take into account how people react when they suspect the survey is not 100% confidential. We call them "Exaggerators", a business that may have a number of mildly dissatisfied customers may provide a unwarranted lower score. Some customers that are "neutral" may score higher simply to avoid upsetting the status quo. More likely however, the vast majority will simply NOT respond at all.

Would you like to obtain your own Net Promoter Score? Are you ready to accept the answers and implement change (if needed) to improve your score.

The good news? We see this as so important in business today that we offer a full, confidential NPS Survey complete with online dashboard to measure those confidential results absolutely FREE . To get started, simply email us stating why you think obtaining your NPS Score is so important - our team will do the rest and submit the survey for you to approve. You then simply use the link we provide and send that out to ALL your customers, not just the ones you like !!

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How To Prepare A Business For SALE

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How to Increase the Value of Your Business Before You Sell

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What Buyers Look For When Buying A Small Business

What Buyers Look For When Buying A Small Business

How Does An Employee Ownership Trust Work?

How Does An Employee Ownership Trust (EOT) Work?

When Should I Start Exit Planning?

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When Selling What's Best - A Share Deal or Asset Deal?

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What KILLS A Business Sale?

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Why 80% of UK Businesses Listed for Sale Never Sell (And How to Be in the 20%)

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Is My Business Sellable? It's Just Me.

Who Will Buy My Business? It's Just Me.

Who Will BUY My Business

Who Will BUY My Business?

How to Start Exit Planning 2–5 Years Before Selling Your Business

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How Do I Sell My Business Quickly?

How Do I Sell My Business Quickly?

EBITDA or SDE - What's BEST?

What's Best To Value A Business - EBITDA or SDE?

How Do I VALUE My Business?

How Do I Value My Business?

Locked Box or Completion Accounts

Locked Box or Completion Accounts - What's BEST For YOU When Selling Your Business?

What's The Difference Between An Asset Sale and Share Sale?

What's Best For You ? An Asset Sale or a Share Sale?

Why Is My Business NOT Selling?

Why Can't I Sell My Business?

Can You Sell A Self-Employed Business?

Can You Sell A Self Employed Business?

When Is The Best Time To Sell My Business?

When Is The Best Time To Sell My Business?

A Humourous Guide To Exit

A Humourous Guide Towards Preparing For A Profitable Business EXIT...

The factors driving you to EXIT could also be DEVALUING your business.

The Symbiosis of Exit Drivers and Business Devaluation: Unraveling the Intricate Dance

TAM, SAM and SOM

What is TAM, SAM and SOM?

Exit Your Business Without Exiting

Exiting Your Business Without Exiting. Avoid being part of the 75% of business owners that regret exiting within a year.

Push and Pull Factors - What Are They?

Push And Pull Factors When Exiting. What Are They?

How Does Due Diligence Work When Selling a Business?

What To Expect During The Due Diligence Process When Selling Your Business.

Why Do Business Owners REGRET Selling?

Why Do So Many Business Owners REGRET Selling Their Business?

When Is A Business NOT Sellable?

When Is A Business NOT Sellable Or Difficult To Sell?

Can I Sell A Business That's NOT Making Money

Can I Sell A Business That's NOT Making Money?

What Are The Options For Exiting & Selling A Business?

What Are The Options For Exiting & Selling My Business?

What Is A Net Promoter Score?

What Is A Net Promoter Score?

Exiting Your Business Without Exiting.
Avoid being part of the 75% of business owners that regret exiting within a year.