Some are predicting a demographic time-bomb of baby-boomer owned businesses that lack a viable exit strategy. They fear the economic impact on employment and GDP if there is a sudden spike in small businesses closing.
Here are a few worrisome statistics to consider:
—Baby Boomers own more than 10 million privately owned businesses.
—It is estimated that Boomers will attempt to sell more than 65-75 percent of these companies in the next 10 years.
—The value of these businesses is estimated to be $10 trillion.
I have a solution…
Do you watch Million Dollar Listing – New York or LA? My kids love these shows, so I by default watch them too. They sell real-estate for top dollar. To do this they often have to “stage” the property with furniture and decorating to help prospective buyers see the value of the property.
This got me to thinking about all those baby-boomer owned businesses. They need a bit of “staging”. The value is there. The problem is they are not packaged to sell. Sure the numbers may look right, but their operations are a mess!
The prospects run scared. They are worried they will not be able to operate the business without the owner’s day-to-day involvement. Their fear is compounded when they consider the impact of a key person quitting soon after the business is acquired.
The result is the buyers becomes less willing to pay a maximum price with cash terms. They offer an earn-out with unacceptable conditions that scare the seller away.
Am I right?
So, here is my BIG idea, and it results in two new revenue streams for business brokers, coaches, CPAs, or any other professional who specialize in succession planning and preparing a company’s exit strategy: Offer to package your client’s business operations using ManageHub Software and then offer the buyer continuity coaching via the online ManageHub interface.
ManageHub Software is an ideal choice because it organizes a company’s operational know-how into easy-to-manage process-team workspaces. It makes it easier for a prospective buyer to understand how the business operates. It also gives the buyer confidence they can operate the company without hands-on support.
You can make money selling a ManageHub consulting package to the seller to prepare the business for sale. (The brokers on Million Dollar Listing often quote $25,000+ for staging services.) You can then sell a continuity coaching package to the buyer to give them additional confidence that they can operate the business should something happen to the seller or key employee. Another benefit is the seller can provide the buyer with ongoing support using ManageHub’s online collaboration features. This will allow the seller to stay engaged but limit the need for them to stay local. And, because you were involved in documenting the company’s processes you will be familiar with the company’s operations. So, the primary continuity value can be delivered by you and your firm.
With this approach you make money upfront, with the sale, and on the back-end. It benefits the seller by helping them sell their business at a maximum price, and strengthens their negotiating position so they can avoid deal-breaking terms. It benefits the buyer by giving them confidence that they can operate the business should the original business owner becomes unavailable due to sickness, disagreement, or death.
What do you think?? Brilliant, right?
Please contact me to learn how ManageHub can help you offer business packaging and continuity services to your clients.