Welcome back to Leader Talk! In episode 52 we spoke to Roger Jowett, the former CEO of Motion Asia Pacific.
Over the past decade, Roger has held various leadership positions as a Board Director, CEO and COO of notable enterprises across the world. With board-level experience in the fire protection, electronic security, air conditioning service and industrial distribution industries, Roger is highly adept at leading businesses towards growth and success.
With his extensive experience in strategy development, marketing, and building organisational capabilities, Roger has grown an adaptive mindset and believes building energised and high-performing teams is the key to delivering business success.
In this chat we spoke about how to prepare your business for sale, the importance of having an advisor, why busy is a dangerous word and the need to take care of your employees.
Want to learn more? You can read or listen to our chat with Roger Jowett on YouTube, Spotify, Listen Notes, or Player FM. It’s also available anywhere you listen to your favourite podcasts via Buzzsprout.
Authored by Roger Jowett, Former CEO of Motion Asia Pacific.
If you own a small business and you’re running it with no plan of selling it in the future, I suggest you start making a plan. According to Benchmark Business Sales, at least 18,000 Australian businesses were listed to sell in the third quarter of 2022. Yet the vast majority of small businesses that end up for sale usually never plan to sell it.
For a small business to put itself up for sale, there is almost always a trigger event. They are not always for positive reasons. It could be a death of a loved one, illness, or they are simply too tired to carry on running a business. These are not great reasons to sell your business, and the unexpectedness can leave you scrambling. It is best to make the journey easier, more enjoyable and more valuable by having the intention, from the start, to one day sell your business. Not only will planning to sell your business allow you to exit on your own terms, but it will also be a catalyst for building a healthy and productive business along the way.
Prepare your business to sell
Simply having the intention of selling your business will be beneficial because it forces you to develop habits centred around improving your business, even if you are far from the stage of selling it. Suppose you buy a house with the intention to sell it again one day. With that in mind, you’re bound to want to keep the paperwork in order and the house clean. You avoid damage and doing things that might lower the value when you eventually try to sell it.
If you take this same mindset into your business, you will similarly build positive disciplines that keep your business neat and tidy. This will benefit you day-to-day, not just when you’re about to sell it. It’s also not just about the physical tidiness. You can be tidy in terms of the processes and paperwork, ensuring the customers pay on time, and that ideas turn into plans. These are good things to have in any business to help it grow.
First impressions are always important, especially if you want to attract buyers for your business. People can walk into a business and see, smell, and hear if it’s a good business. You can see the cleanliness, hear the good vibe, and feel the good energy in the employees. These are basic things that are good for business anyway, and could be enhanced and made better with the intention of selling the business.
From the buyer’s perspective, they are interested in businesses that have navigated through choppy waters. They want a company that can bring something to the table. I have seen many occasions where the smaller business being bought is doing better things in procurement than the buyer. There is a lot of greatness in small businesses so if you are looking to sell yours, you have to consistently sharpen and leverage your strengths. Never assume the acquirer is the better business.
The value in having the mindset that one day you’re going to sell the business, is that you maintain the best business practices at all times. If you don’t plan to sell and get hit with an unexpected trigger event, you’re left struggling with last-ditch efforts to make your business sellable.
Have an advisor
Selling a business can be a long and tedious process involving lawyers, paperwork and a lot of back and forth. It is always best to get an advisor. The value is that they are a nice buffer between the buyer and seller. The best and easiest transactions are the ones where the advisor is the single go-to person. If the buyer goes straight to the seller there is a risk it may get argumentative. Having a middle person reduces friction and misunderstandings. For example, if the buyer says they want to look at the numbers regarding something, the advisor will go to the seller, gather the information and give it to the buyer.
Deals aren’t super smooth and linear. There are bumps, twists and turns, and even timeouts. When people try to sell without advisors, it risks becoming even more disagreeable, like being in the dentist’s chair for a bit too long, and no one wants that! Having an advisor when selling your business is like having a real estate agent when selling your house – they’ll provide you with market knowledge and do all the nitty gritty work.
Never be too busy
If you think you’re too busy to be planning or preparing your business for sale, then you are in danger. You need to stand back and analyse whether you are spending too much time on things you can probably let go. Focus only on the things that are genuinely important to you as the owner. Ask yourself which tasks can be halved or delegated to a junior member for their growth.
Creating time and understanding which things positively impact business are difficult skills to learn. It is something I learnt only in the latter years of my career. It starts with the true intention of getting off that mouse wheel. As you run a business, it’s natural that you make it your life, but you will also start getting more tired over time. Everyone needs a break.
Create a day in the week when you can put the tools down and be thinking about the business’s future. Don’t worry, the company will still keep running. Most of that relies on building a good team around you. When you recognise you’re good at one thing, and someone else is good at another, then it’s only a matter of teaching that person your piece of the puzzle so they’ll be fine without you. This is a necessary objective to have. Business owners are brave to risk setting up their own business, which is why I am passionate for their business to get to that position where the owner can have fun and come back energised.
You never have all the answers so discuss with your team how you can get into that position where, if one day you decide to take a break, they are confident that they can run the business without you. It always helps to share the problem with your team and work out together how to get to a solution.
Take care of your employees
Being sold is incredibly scary for your employees. When the boss says they’re going to sell the company, there are 100 questions going through their mind and not many answers because the answers come from the hypothetical. That is why considering your employees is an important aspect to prioritise when selling your business.
Your employees will only benefit from the sale if they believe in their team. This depends on good leadership that ensures the employees know their roles clearly and they feel supported from all sides. Positivity also stems from the boss believing in their shared ability to do what they set out to do. This way the employees know and understand the expectation to perform. In small businesses, creating comradery, teamwork and focus is absolutely achievable.
My litmus test for business owners I meet is always the question of whether they can go away on a cruise holiday for two weeks with no Wi-Fi. Will your business carry on, or are you scared to get on the boat because you know you’ll come back to a long list of challenges? I have seen businesses where owners take some leave from the business, and it carries on. This is because the employee loyalty is huge; they are a strong unit that has a sense of duty to carry on the business and believes they can.
According to Forbes, we also have a new generation of employees, hungry for learning and development. These people will leave a company if they feel they’re not building their skills and advancing. I recommend businesses work out ways to retain good young talent because they have the digital skills and forward-thinking that are critical pieces of the equation.
If you’re selling your business, showcasing talent like this is important. Your competitors might have the same products and customers, and the only difference between you and them is your people doing the job faster, more professionally, or with a smile. Those people-based differentiators make the customers come back and spread the word. Showing that talent when you’re selling a business is hard to do in the panic or trigger process, so again, it needs to be planned and built.
Your business is your baby, and sometimes it’s hard to let it go. However, starting a business with the intention to sell it one day comes with a multitude of benefits. Not only will it allow you to exit on your own terms, it will also drive you to build good business practices and a strong team, which will only benefit your day-to-day sales and operations. So ask yourself, is your business prepared for the future?