For many business owners their business is in effect their retirement plan. Yes, they do have a SEP or IRA, but most of their assets are tied up in their business.
When it comes time for you to retire, you want to sell your answering service for the best possible terms in order to provide you with the best possible retirement. Follow these tips to retire well:
Structure to Sell: Many entrepreneurs operate multiple businesses or have secondary businesses (or product lines) nestled inside a primary one. Separate all businesses and business lines so that they are easy for a buyer to evaluate and easy for you to sell one part without making a mess of what’s left. In addition to making financial delineations, look at staffing and other shared resources, such as the business name, website, phone numbers, and so forth.
Cultivate Buyers: Network with potential buyers within the industry. Look for people you respect and who share common values, in addition to having the wherewithal or history of acquiring other answering services. If you have a family member or key employee who is a potential buyer, discuss this with them, make a plan, establish expectations, and set a timetable. It’s never too early to groom them to take over.
Seek Financial Advice: Meet with your financial advisor and accountant early on to determine how to best structure a sale to meet your retirement needs and minimize your tax liability. Waiting until after the close is too late, and trying to figure these things out in the middle of negotiations, makes the discussions more problematic than they need be.
Maximize Valuation: Always look for ways to increase the value of your business. In most all cases anything you do to boost the appraisal of your answering service will also have a near term payoff of increased profits.
Look to make every client profitable. Stay on top of collections. Optimize operations. Document processes. Simplify complex procedures. Resolve loose ends. Ensure each employee contributes to your answering service’s overall financial success. Get rid of dead weight and unprofitable services.
Be Ready to Act: Simultaneously keep two thoughts in mind: First, operate in your best long-term interest as if you will own your answering service forever. Second, always be ready to sell. By holding these two dichotomies in constant tension, you are most apt to have your answering service positioned to sell at a moment’s notice, while avoiding the potential of coasting, which will lower your valuation. Each week, act in the long term while being open to commence sales negotiation.
Follow these steps to move from answering service owner into retirement with the best financial outcome possible. It’s never too early to prepare for your future. Start today.
Janet Livingston is the president of Call Center Sales Pro, a premier sales and marketing service provider and consultancy for the call center and telephone answering service industry. Contact Janet at email@example.com or 800-901-7706 to arrange a private consultation about buying or selling an answering service.
Peter Lyle DeHaan is a freelance writer from Southwest Michigan.