There are many reasons why you might not be able to sell your business, but today we want to focus on three in particular. Think of them as the ghosts of business past, present, and future.
1.The Ghost of Business Past: You have a lopsided company
Now, many businesses started with “that one client” which may have carried them through those long and lonely nights at the beginning, but for a business to truly become something other than an owned job, it needs to have a diverse client portfolio, revenue-wise.
If your business is lopsided it’s unattractive to buyers because they will naturally and obviously ask, “Well, what happens to this business if your major client goes out of business, gets acquired, or goes into crisis?”
Since you’re not in charge of your client’s business, you probably don’t know how or when any of these eventualities could occur, but more importantly, you probably don’t have an exciting answer which replaces all that revenue.
2.The Ghost of Business Present: You have no recurring revenue
While not every business will work on a subscription model, it’s definitely a trend in multiple industries to pivot to create more steady and dependable revenue streams.
While some of these pivots might be obvious, like flower companies offering a monthly subscription for both personal and corporate clients, the unexpected one that got large scale adoption was Amazon Prime: an annual recurring fee that actually led customers to buy more from the mega-giant.
If you want to learn more about this trend (and get some ideas for your business) you should read John Warrilow’s The Automatic Customer.
3.The Ghost of Business Future: The company can’t make it without you
How often are you on vacation, and how long can those vacations be? The best answers are, “Often,” and “however long I want,” but obviously preferences are different for each business owner. The wrong answers are definitely, “Never,” and “not more than a few days.”
This indicates a strong dependence upon you – whether it’s because you are the secret sauce in the sales cycle, because you are the only manager who can keep your team on task, or because you are simply too involved in day-to-day operations to be gone for any amount of time.
This screams “owned job” to a potential buyer and if that buyer loves your industry and wants to get involved right away, that might be a great play for them, but nine times out of ten they’re going to see this situation as a giant red flag, that an owner hasn’t created systems to make the company survivable without his/her daily blood, sweat, and tears.
Remember that Scrooge was able to send away the ghosts at the end of A Christmas Carol by promising to amend his life. Take a look at your own business to see if any of these ghosts are hanging about.
And then get rid of them.