It’s no secret that a business where the owner works fewer hours yet maintains the same level of profit is more valuable and marketable. Who wouldn't prefer that?
If you are looking at a longer time horizon before a desired business exit, focusing on reducing your working hours while maintaining profitability can make your business significantly more appealing to potential buyers. Achieving this can involve better staff training, delegating responsibilities, creating more efficient systems, or incorporating automation.
Successfully reducing the owner’s involvement can still leave some buyers skeptical. They might wonder, "Does the business owner really only work 10 hours per week, or is it closer to 40?" To address this, consider keeping a work journal starting six months to a year before you plan to sell. Diligently record your daily working hours and tasks to provide concrete evidence of your limited involvement. Accurate records are crucial to avoid any claims of misrepresentation, which can arise if the new owner finds themselves working 40+ hours per week instead of the average of 10 hours per week you've been working.
A great way to test your business’s ability to run with minimal owner involvement is to take a 3-4 week vacation without working. If the business runs smoothly in your absence, it indicates operational soundness, allowing a new owner to focus on strategic initiatives. On the other hand, if the business struggles, it’s an opportunity to identify areas for improvement, making your business more passive in preparation for sale.
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