No Business Should Fail

“No business should fail when the owner becomes disabled or dies.”

I am in the fourth quarter of life. We have started four companies, sold three, and are now transitioning John M. Ruh and Associates to live “Beyond John.” For many years, we have worked with entrepreneurs at three stages: Getting Started, Getting Growing, and Getting Out. This blog is about Getting Out.

Getting Out
You, as the owner or founder, are not the Golden Goose (www.johnruh.com/golden-goose-is-your-company/). Regardless of whether your business is very small or large, people’s lives depend on the viability of the Goose. Creating a transition plan before you “have to” is wise for the company—and for you.

How to Do It: 3 Steps

Step 1: Decide to Transition the Business
This sounds simple. However, when your life is invested in a business, the decision is usually very difficult. It requires a conscious commitment and a willingness to let go—no small feat. I like to say it requires you to bench your ego and do what is best for the Golden Goose. Letting go, with Steps 2 and 3 done right, can save the business.

Step 2: Design and Package for Maximum Impact
Most sellers rely on business brokers, M&A professionals, and financial leaders who focus mostly on EBITDA. EBITDA is important, but it is only part of the picture. We look at your culture, uniqueness, and future opportunity for the buyer—and then position the business properly. Design and packaging need to happen before any search begins. If you have a strong customer database, valuable relationships, and a unique market position, those assets must be highlighted. Many financial minds miss one of the most important aspects of a business: your customer database and the future opportunity it brings to a buyer. As Price Pritchett said so wisely:

“Your customers are your only source of security.”

Step 3: Build the Strategy
Do not start this step until Steps 1 and 2 are done right. The right strategy, supported by the right tactics, does not guarantee that you will successfully close or sell your business—but it does focus your effort. You will either need someone internally who is highly skilled at this work, or you will need to hire someone who has completed multiple M&A deals and understands the steps and resources required. Steps 2 and 3 should be documented in writing so you and your team can confidently say, “We are positioned well for transition.”

Suggested Next Step
A smart first step is to meet with Mike Perich, my former client, who was CEO of a fifth-generation family-owned business and has completed more than 25 M&A deals. We can interview you to discuss where you are, where you want to go, and the wisest course of action to support your Golden Goose.