As they say, hindsight is a wonderful thing! And they (whoever ‘they’ are), are not wrong.
After nearly 25 years of work since University, including starting a couple of businesses and selling one to date, I’ve got so much to learn!
My sense is that had I acted sooner, possibly actually listened to rather than just heard what others were advising and had a continual action plan in place or even paid for some help, this may have ultimately shortened up the time from business creation to growth then sale. I say ‘may’ because who really can predict outcomes, however I have no doubt that adhering to some of these mentions, would have undoubtedly made the journey a little more enjoyable during some of the tougher times. And that certainly would have been helpful!
There are countless examples of these personal lessons to myself that I could note down, but here are 10 for now, which I hope ring some bells for you also.
1) Understand what Asset(s) you’re creating
This may sound extremely basic, however at the end of the day you ideally have a saleable Business Asset, as well as being able to provide suitable regular and sustainable cashflows to support a going concern.
Consider what your tangible and intangible assets might be. Is there value in a trademark? A business model? An audience/database? A process? Scalability?
It’s important to think really carefully about what truly sets you apart and will make you attractive to suitable buyers. It’s great to be producing revenue however where is it leading to and how unique are you?
2) Have an End Game Plan (or Exit/Succession) as early as possible
If you’re ready with a detailed action plan as to how to get from A to B it means that you are in a great position to either grow, change, partner or even sell your business, anytime.
Anytime is the key word here, as you just never know what is around the corner. Be ready for tomorrow. Know who your strategic partners are when you begin and how they can not only help you build your business but provide you with a potential buyer.
Due Diligence itself can take a very, very long time – even with everything documented. Each and every day that you’re away from your business can result in decreased value as you take your eye off the ball and provide a buyer with more leverage.
Having a ready plan also means that you might be able to attract more buyers at the same time.
3) IP in your head is worth gold to someone, however once they too can ‘touch it’
Transfer IP from your head to somewhere else that’s safe, so that it can be extracted into the hands of potential buyers or partners, when the time is right (and the necessary legals have been put in place).
This is likely to shorten the DD process and it might mean the difference between selling and being able to hand over the keys, walking away immediately or having to stay around and continue working in the business longer than you might have anticipated.
4) Count revenue only once it’s sitting in the bank
Technically this is of course not true, however particularly at start-up, my suggestion is to not get caught up with promises and even invoices with payment terms. Anything can happen between those two ‘events’ and seeing that money deposited.
5) Do your best to avoid hiring people when you’re desperate
Sure, this may sound like Business 101, however when you’re ‘in it’, you can often feel that surely anything is better than nothing. Yes, it’s possible that you may just strike it lucky however in my experience, the chances are slim to nil. The odds are that you will find an alternative way through, just temporarily.
On that note, if you know you’ve made a poor decision, in my experience, it’s important for everyone’s sake, to act quickly. Always seek professional advice before acting though.
6) Ensure that you speak with a professional and have suitable Insurances in place
As well as having professional Legal & Governance advice, Insurance is a Murphy’s Law type requirement that I’d suggest is critical to seek advice on, even though hopefully you never actually need it.
That’s the point – if you have it you won’t worry but what’s the alternative?
What if something happens that means you or your business partner can’t work for a period of time or forever?; a customer from yesteryear decides that you didn’t quite deliver what you said you’d deliver, however you’ve already sold your business?; a large shareholder gets a divorce and needs to access capital?; Your server and backups get corrupted? The list can go on and on. Definitely seek professional advice on this one.
7) Think about a Risk heatmap (or just a list)
This may seem over the top, however it really is a good thing in my experience, provided it’s not taken too far.
It’s worth thinking about things that might cause concern (like in the point above) if they don’t go to plan…whether the server goes down and can’t be recovered or you hear that a large global competitor might be venturing into your turf or someone looks to steel your IP. Whatever it is and no matter how far-fetched, it’s worth covering off and reviewing regularly, to see whether things are getting more or less risky as time goes on.
8) Have a handle on ROI of all spend
It’s imperative to measure all of your spend and ensure that it’s delivering – and that you’re not just following the crowd. Measurement is critical.
Within marketing as an example, and as we all know, there are just so many channels. It’s also an area where costs can really run away from you, as you believe you simply must be in if everyone else is seemingly doing the same. Regularly question what your spend is delivering and act quickly if it’s not performing.
9) Exercise daily
For your own good, please exercise every day.
I really wish that I had listened to a colleague much earlier, who really tried to get me to get more balance in life. Looking back, for a good few years, I was sluggish and felt that if I was exercising, I wasn’t building the business. How wrong I was!
Having a challenge, making it habit and ruling it in the diary ahead of time, made all the difference.
10) Have a business coach
It seems that you’re giving in if you ‘need’ someone to coach you along the way of your business.
With sport we tend to listen to a coach. With an injury we tend to listen to a physio or our doctor. We entrust our kids’ education to teachers.
Therefore, why wouldn’t we want someone to speak with and help us when required, for something as valuable and often all consuming, as our business Asset and income generator?
I was guilty of this also for a great many years, however it took just one suggestion from a Business Coach to tidy up a particular part of the business that we knew we needed to but just got too busy.
Without a word of a lie, it was that suggestion that ended up being a key component of ultimately selling our business in my view.
A plan is critical.
Momentum is critical.
An independent view and guiding hand as and when required, from someone who has experienced the realities of business and lived to tell the tale, is, I believe, critical also.