The dream of most small business owners is to exit their business rich. Many of them have over 80% of their personal wealth tied up in their company’s value, but statistics show only about 30% will end up selling their business to an outside buyer.
On The Small Business Radio Show this week, Sharon Lechter, co-author of the international bestseller “Rich Dad Poor Dad”, has released 14 other books in the Rich Dad series. She is now the co-author of new book with Michelle Seiler Tucker, called “Exit Rich: The 6 P Method to Sell Your Business for Huge Profit.”
Sharon explains that most small businesses do not exit rich because they have not built a foundation that allows them to sell the company for maximum value. She adds that “they focus on profit and sales and not on the foundation like operation systems, competitive advantages and the hidden value in your company. Too many business owners own a job not an asset.”
Interview with Author Sharon Lechter
Sharon says that most owners think their company is worth more than it is. She explains that there is a difference between a “mission brand and a celebrity brand”. The celebrity brand is tied directly to the personality and work of the owner. She adds that it is “harder to sell a business wrapped up in a person. It is much easier to sell a business that is based on established systems and not based an owner’s personality. Owners sometimes sees themselves as the company instead of the operator of the business.” Sharon says if you want real long term value, you must build it independent from what you contribute. She insists that “entrepreneurs are not the best operators. The first P (of the 6 P Method) is people; you have to hire people where you are weak.”
According to Sharon, the biggest mistakes small companies make that lead to unnecessary failure in selling their company is that they do not establish the best first impression; they don’t have all their financials prepared. Sharon says that “you can’t manage what you can’t measure; your numbers tell a story. They can identify holes in your business by looking at your financials.”
Sharon suggests hiring a business broker since selling is a very emotional process. Have someone that does not have an emotional connection to the sale is a benefit; “High emotion (in this process) is low intelligence.”
Listen to the entire interview on how to exit your business rich on The Small Business Radio Show.