My Thoughts by Rick Stephens

Good Goodwill

Posted in General Business,Selling Your Business by Rick on the October 24th, 2006

I have spoken to several business owners recently who have said to me that they would like to position the company for sale within the next 3 to 5 years. All of these businesses were financially strong with revenues in excess of $3 million a year.

After speaking with them for awhile, each of them made another interesting comment. They said that they were not interested in growing because they would then have to hire and manage supervisors and additional employees and that would be too much trouble. It would also cause them to lose touch with their customers, which gave them a competitive advantage in the area of Customer Service and Quality Control.

I asked each of them how much the company would be worth without them being there. They all agreed that it would be worth less than their financials indicated, because they were the company. My next question; “So if you go away for a long period of time, what would happen to the business?” Again the answer was basically the same, “It would begin to lose money.”

Can you see the problem here? How can these successful entrepreneurs position their business for sale if all of the Goodwill is positioned on their shoulders? It will be very difficult at best.

So, I respectfully suggested to each of them that they were not doing themselves a favor by staying so close to the business. It was imperative that they start today putting processes in place to allow others (Yes, they may need to hire supervisors and more employees) to run the business. This was not going to happen in just a few months. It could in fact take the entire 3 to 5 years to reach this objective.

If you intend to sell your business and make what it is worth, don’t get caught with the goodwill in your court. Give it to the business.

To Your Success -

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