Business owners’ best chance to optimise the return on exit from their business is dependent on them presenting buyers with the opportunity to take over a turn-key operation. Our survey of the top “Asking Price” manufacturing (fabrication) companies listed on BusinessForSale.com found three key attributes consistent with a turn-key claim; high cashflow (seller’s discretionary earnings), high revenue and a strong workforce. We also observed specific traits consistent among the top companies that influenced these attributes. Traits that are achievable by business owners looking to optimise their return on exit in 3 to 10 years. This article highlights these traits and the solutions business owners may use to achieve them.
High Cashflow and Revenue
Our survey suggests companies’ cashflow and revenues directly correlates with product quality and the loyalty, volume & diversity of their customers and the leads the customers generate. Business owners looking to sell soon may attain or accentuate these traits by implementing the solutions listed:
- Improve the record keeping system to ensure timely and accurate revenue and cash data are accessible.
- Update and make accessible to employees, relevant policies and procedures that will equip them to effectively complete their tasks.
- Apply industry best practices to develop a dynamic team and an adaptive shop floor that allow for quick response time and production flexibility for any run size.
- Engage customers through timely and constructive response to feedbacks.
Our survey indicates minimal owner dependency is enjoyed by the top companies. Critical operations are performed by dynamic, skilled and motivated work teams that are well-qualified with experienced, non-unionized employees. Business owners looking to exit soon may implement solutions that encourage employees to be vested in the success of the business. Some of which are listed:
- Delegate key roles currently performed by the owner manager.
- Offer employees ESOP or MBO opportunities.
- Update and make accessible employee training manual and health and safety programs.
The solutions proposed here are not exhaustive and may, with other solutions appropriate for individual circumstances, be used to help business owners offer a turn-key operation to buyers. Effectuation Optimum is available to partner with you to develop and implement these solutions and achieve the optimal return on exit you desire.