Kissing your business goodbyeExperts say it’s never too early to start thinking about selling. In fact, they suggest developing an exit strategy long before that next business opportunity beckons or it’s time to retire. “Things can be done today that can have big impact on how valuable the business is 20 years from now,” says small business expert Jeff Cornwall. David Doyle, director of the Tennessee Small Business Development Center at Southwest Tennessee Community College in Memphis, agrees. “Grow the business to sell it,” Doyle says. “Don’t let the day-to-day activities of the business prevent you from being able to focus on business growth.” Doyle and Cornwall also say it’s vital that business owners position businesses to run without them. “If all of what is in your business is based on you and your relationships, it doesn’t have real value in the business world without you,” Cornwall says. “You have to make sure the business is independent of needing you over the long term. If you have an accounting firm, for example, you want to create an accounting firm with 20 employees capable of managing relationships when you are not there.” Cornwall says one of the fundamental mistakes people make when it’s time to sell is assuming that what buyers are buying is the book value of the balance sheet. “While assets are important on one level, they don’t have value if they don’t create cash flow,” he says. “What a buyer buys is the ability of the business to generate cash flow in the future, so they’re not interested in assets that can’t create future revenue.” Doyle suggests hiring a business broker to facilitate the sale. Business broker Sam Cantor of Sam Cantor and Company in Memphis says it’s advantageous to use a broker because selling a business is a fulltime job and losing focus on daily operations may result in a competitive downturn that could prevent an acquisition from materializing. “If you’re trying to run the business and sell it at the same time, there may not be enough hours in the day,” he says. “So I tell my clients, ‘You do today what you did the day before, and let me worry about selling the business.’” Cornwall says a broker can particularly add value in more obscure industries. “If you know people buying up companies in your industry, you might approach them first yourself, but if that’s not going on, a broker might be able to help you find potential buyers,” he says. When it comes to selling, spending money to hire people who know what they’re doing will pay off in the long run, Cornwall says. For example, he advocates working with an attorney who specializes in mergers and acquisitions, rather than a general business attorney. “They can be expensive, but they pay for themselves many times over,” Cornwall says. “It’s important not to cut corners at this point in the business. You want someone who can put together a solid transaction that will hold up, so that you don’t have to worry about it haunting you later.”