Could your business run for a month without you?

Here is a test we ask almost every owner to take, usually in the first conversation. Picture yourself gone for thirty days. No calls, no texts, no stopping by. Would the jobs still go out on time? Would customers still get answers? Would payroll still run?

If the honest answer is no, you are in good company. Most owners who built a business from nothing are the business. They hold the key customer relationships, quote the big jobs, solve the problems nobody else can, and know where everything is. That is how the company got built. It is also the first thing a buyer will worry about.

Why buyers care so much

A buyer is not paying for the business you ran last year. They are paying for the profit it will earn after you leave. If every job, customer and decision runs through you, a buyer sees a business whose profit could walk out the door at closing. Risk lowers the price.

It shows up in an offer in a few ways:

• A lower multiple. Two businesses with the same earnings can sell for very different prices when one depends on its owner and the other does not.
• More of the price at risk. A buyer who is nervous about the handoff pushes more of the price into a seller note, so part of what you are paid depends on the business doing well after you leave.
• A longer goodbye. Expect to be asked to stay on through a longer transition, until customers and staff trust the new owner.
• A harder time with the lender. Most Main Street acquisitions are financed. A lender looking at an owner-dependent business asks the same question the buyer does, and the answer affects how much it will lend.

Three things that help

1. Train a lead person who can run the day

Every business needs someone other than the owner who can open in the morning, assign the work, handle the upset customer and make the call when something goes wrong. In a trade business that is usually a foreman or field supervisor. In a practice or an office, an office manager. Give that person real authority, not just a title, and let them make decisions while you are still there to back them up.

2. Write down how you do things

How you price a job, which vendors you trust, the steps for setting up a new account, what gets checked before a truck leaves the yard. If it lives only in your head, a buyer cannot buy it. It does not have to be fancy. A shared folder of checklists and short how-to notes is enough, as long as your team actually uses it.

3. Hand off key customers

If your biggest customers call your cell phone, start bringing your lead person into those conversations now. Over a year or two, customers should come to know your team, not just you. Then, when the business changes hands, the relationship stays.

A quick self-check

Answer yes or no:

• Someone other than me can quote and price our typical job.
• Our five biggest customers know at least one person on my team by name.
• I have taken a full week off in the last year and the business did not slip.
• Our key processes are written down where my team can find them.
• Licenses, permits, bank accounts and vendor accounts do not depend on me alone.

Three or more yes answers, and a buyer will see a business with a team behind it. Fewer than three is not a problem if you have time. It is a to-do list.

A note for licensed trades. In electrical, plumbing, HVAC and similar businesses, ask who holds the license the company operates under. If it is you, a buyer will need a plan for that on day one, and it is far easier to solve two years before a sale than two weeks before closing.

Worth doing even if you never sell

You do not need to be planning a sale for any of this to pay off. A business that runs without its owner is worth more to a buyer, and it is a lot less stressful to own. It is also what lets you take a real vacation, get through a health scare, or simply work fewer hours.

If you want to know where your business stands today, start with the free estimate below. And if you would like a candid read on how a buyer would see your business, we are glad to talk.