Global serial entrepreneur and one of Australia’s entrepreneurship educators, Dr Tom McKaskill, says Baby Boomers are not adequately preparing to sell their businesses at a profit and retire comfortably.
Data reveals that a third of private businesses in Australia are in the baby boomer group, and that many business operators looking to sell out simply believe they will stumble across a buyer and sell for whatever they can get their hands on.
The bad news is there aren’t enough buyers, leaving many to miss out on a good price, and putting their years of hard work to waste. The most successful of this group will be those well prepared and connected to potential buyers enabling them to reach 2 – 10 times a conventional value for their businesses.
"Businesses should be set up for a financial buyer based on its inherent stream of future profits and preparation," Dr McKaskill says. "The difficulty most business owners have is they are forced into a conventional model that undervalues their business as they are selling their past history, instead of a future model."
By reducing risk, improving forecast reliability, implementing a productivity and profitability program, setting up a succession plan, developing growth and growth potential and pre-selecting potential buyers, vendors can generate significant increases in value on sale.
Dr Tom McKaskill holds the The Entrepreneurial SME Series at the Centre for Executive Education at Bond University. They’re a series of one hour breakfast or dinner lectures at Bond University, covering topics: Evaluating business opportunities; Engineering growth into your business; Selling your business – Get a high earnings multiple; Selling your business – Leveraging strategic value; Creating a strategic alliance program; Building an acquisition strategy for your business; Raising venture capital; How to become an angel investor; Building and export capability; and Managing business volatility.
