Today’s Wisdom - The opportunities over the next 5 years

What are the opportunities for people who are looking to buy or sell a business over the next few years?

From the seller’s perspective it’s a mixed bag. I’ve written about this before with the expected tsunami of businesses flooding onto the market over the next 3 to 5 years.

There are primary sources that are clear on the data. I am also collecting anecdotal evidence that most business owners are sleep walking towards their business life sequel. I’m referring mainly here to the older Baby Boomer cohort, but the changing market is not going to discriminate on the falling business valuations.

The threat is that prices will be driven down regardless of your business type. It is simply a supply and demand calculation. Obviously within that there will be niches that may outperform, and the better structured businesses will sell quicker and be worth relatively more.

But the reality is that the multiples that were able to be sought 10 years ago no longer exist.

The opportunity is to get ahead of the pack and do the early research on the most lucrative formula.

A deep dive into your business to see where there are value killers are is never a bad idea. You are looking to see what’s working and what could be improved.

This uncovers the options of restructure, regenerate, or reinvigorate that part of the business that need help.

This does take time and intention which is why few will do it.

I know I sound like a broken record, but it is important.

Where does Purpose fit into the equation?

One area that I know is often misunderstood as not having a commercial value is purpose.

Simon Sinek and Adam Grant, two leading lights in this space, have made their own commercial success selling the idea of Why and Purpose. And yet there appears to be an attitude of ambivalence to the value purpose adds to a business.

The problem is how do you value purpose? How does it translate into an increase in the sale price or profitability?

The answer lies off the back of the concept that good people add value to your business.

If you agree to this comment then Purpose is a natural follow on.

I’ve spoken about Stewardship before and how it can contribute to profits.

This approach focuses on making a positive impact on your employees, customers, and the broader community. By adopting stewardship principles, you can significantly enhance your business's value and appeal to potential buyers.

Here are five strategies to implement stewardship in your business:

1. Define your business's higher purpose.

Look beyond profit margins and identify why your business truly exists. What unique value does it bring to people's lives? Communicate this purpose clearly to your team and stakeholders.

2. Listen to all stakeholders

Embrace inclusive decision-making by actively seeking input from employees, customers, and even suppliers. Their diverse perspectives can lead to innovative solutions and foster a sense of ownership and engagement.

3. Think longer-term

While day-to-day operations are important, dedicate time to the exit plan. What could you do to remove you from the hub of the business and create a turn-key operation. Technology is an obvious one to look at. How can you upskill your workforce? Are your operations document with sustainable practices? Having these in place signals to buyers that your business is future-ready.

4. Be transparent?

Start having conversations with external advisers and have them grill you over the performance of the business. Treat it like a pre-due diligence exercise. This is going to happen at some time so you may as well discover where the gaps are when you go to sell. This is a dry run for the real due diligence processes.

5. Embrace diversity

Different backgrounds and experiences can drive creativity, problem-solving, and appeal to a broader customer base.

Attract the right buyer

Remember, today's buyers will come from the next generation. They are looking for more than just a profitable enterprise. They seek businesses with a strong reputation, engaged employees, and positive community impact.

By focusing on stewardship, you're not just improving your business for the present; you're making it more attractive for future ownership.

Interested in diving deeper into this topic? Check out my full blog post for more insights and practical tips.

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