Closing a sell for construction industry

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hi I'm Derek Business Systems coach  for contractors so you want to sell   your company or know how to get top dollar if  you do decide to sell it in the future you're   in the right place I'll be sharing with  you the three different areas of how to   know how to sell your business for the most  money as well as make it even more valuable   moving forward plus special bonus at the  end so stick around to the end let's go [Music] okay so before we get started give this video  a big thumbs like up click the button subscribe   to the channel best way to grow your contracting  business subscribe to the channel so much wealth   of information for you to grow your business and  like I said I'll be talking about three different   areas so we're talking about business brokers  minimum requirements for selling a business as   well as ways to increase the sellability of your  construction business and a special bonus at the   end some additional consideration that you need  to know if you do decide to sell your business or   when you do sell for business so super important  to have like an exit strategy whether that's   you know selling it or passing it on to a family  member or colleague or whatever having this stuff   in place even if you're not planning on selling  now or even selling in the future this is so   important because you're creating an asset you're  creating value by following these steps that I'm   going to be helping with today so first thing this  is not legal advice no it's not Financial advice   I'm not telling you to sell your business or not  sell your business these are just things that you   need to be thinking about or ways that you can  improve the value of your business so first thing   to do though if you are considering this is talk  with a trusted business broker generally there's   going to be a few or more than a few in most  cities talk with one that specifically knows   Contracting construction business Home Services  business talk with one that knows that industry   get evaluation ask them you know what do you think  I can I can sell my business for generally it's   going to be a multiplier it could be a multiplier  profit multiplier of Revenue there's different   you know characteristics or criteria as far as  like what the multiplier is going to be and if   you don't really have any systems and everything  relies on you and you're just kind of an General   kind of business your multiplier is going to be  very low if you've got a company that's running   and humming you've been in business for many years  you've got a lot of brand awareness and you've   got systems and processes and managers then your  multipliers can be a lot higher you'll be going   to be able to sell your company for a lot more  and when you do talk with business broker ask   them how do I improve right it's not you know  you don't want to just know your multiplier but   say like where could I improve on my business and  and they'll give you specific advice of from other   businesses that they saw like hey your business  is maybe lacking this or if you really want to   improve you know your multiplier for for how  much you can sell your business this is an area   that you should be looking at or what have you so  seek a professional advice and and listen to that   advice in order to to get the most all right stay  with me here second one we're gonna move on to is   minimum requirements so just because you have  a business and even if you're doing a million   dollars in sales if you don't have these minimum  requirements in place you're not going to be able   to sell your business very much and the only  person probably interested in possibly again   possibly buying your business might be your  competition just to get your clients or your   client base uh they're not really interested in  your business or continuing your business so these   memory requirements is what you need in place  in order to just be able to sell your business   in the first place first thing is systems and a  standard operating procedure infrastructure so sop   infrastructure there should be systems for all the  different functions of your business there should   be things in place that are explaining everything  from how to manage sales and marketing how to   manage clients how to manage employees higher  employees training programs so the more standard   operating procedures and systems whether that's  just documented processes or software that's in   place of being utilized the better your chances  are and the more sellability you'll be able to   have management team is another one so if you are  the only manager in your business you're going   to have a really hard time selling your business  nobody wants to buy a job right if you're working   like 40 60 hours a week who wants to buy that  company to have to work 40 or 60 hours a week   you know maybe you'll get lucky or someone will  give you like really you know minor money of just   whatever kind of like you're not going to get a  multiplier essentially what I'm saying they may   buy your company and they'll pay for you know  the tools and supplies and equipment they have   probably not even at market value because it's  a bulk deal but if you have a management team   you have a sales manager a sales person you have  a production manager who's handling your on-site   production you've got some office admin you've got  a Financial Manager who's doing your bookkeeping   and Technical financials and working outside the  system and you're able to kind of you know step   back a little bit and you don't have to work  your ass off off all the time well now you've   got a business that someone might be interested  in buying because they could say like hey if I   spend you know 500 000 or million dollars or  whatever to buy this business I only have to   work maybe you know five ten hours a week to keep  it on track and it'll generate profit and revenue   for me so does that make sense again if you have  any questions or want more details drop a comment   I read the comments I will respond to you and  I'll help you out so you're part of the minimum   requirements is consistent and profitable so if  your revenues all over the place your profits are   all over the place your sellability is going to  be really difficult of a sale to be like hey you   want to buy my company well I don't know you lost  money like three months in a row here you made a   bit of money like you know last year but things  are just like up and down I have no idea if I buy   this company what I'm getting am I going to lose  money am I going to make money or am I going to   make a little bit of money or a lot of money so  you want to have some sort of track record and   keep it consistent profitable and there's ways  to like as a small business owner we're often   like expensing everything right we want to expense  everything so that our taxes that we pay less than   10 taxes you know very common but again talk with  the business broker about this but you may want to   start you know thinking twice about how you're  operating your business and you know pulling   profits out of it in order to be able to show  consistent profitability consistent Revenue over   time in order to get the best price for your sale  and you also want to make sure your financials are   really clean right and nobody's going to want  to buy a business where like the bookkeeping's   behind and they don't really know you know where  money's going or coming from there's no real   tracking methods and stuff like that so you're  going to have to have your financials you know   really clean and up to Snuff minimal dependency  on the owner so we talked about this before there   should be minimal dependency on you in order  to sell your business you should have managers   in place you should have a system in place not  that you can take like you know just fully step   back I mean that's awesome if you can but the  business should be able to at least function at   the level that it's at without your constant  attention minimal effort from you it may not   you know grow and increase and and you know you  probably need a business development driver CEO   which generally is yourself in order to grow but  whatever level you're operating at you should be   able to maintain itself for someone to want to be  able to buy it so yeah those are the men requires   to get into place in order to sell your business  moving on to number three take a little break here   again drop a comment if you've got any questions  selling your business is huge right that's kind   of the dream that a lot of business owners have  is either having a business that fully operates   without you again even if you're not planning on  selling your business just getting your business   in this place and starting to think about systems  and value and the assets of like what a company   is and how it operates you know without your  constant tension super valuable for yourself   and you may get to the point where you've done  all of this work and you realize like you know   what this is actually pretty awesome like I have a  business it's providing profit and revenue I don't   really have to you know spend a ton of time every  week in it I don't really want to sell right now   just continue to operate it and maybe hire like a  general manager or someone to overlook it and you   keep your business but you know that if you ever  wanted to sell it if something did happen or go   sideways or you know you had health concerns or  something you know emergency comes up where you   can't have the business anymore you know at least  you can sell it for you know quickly at a high   dollar value all right makes sense moving on to  number three again third one here fourth one is   the bonus coming up soon increased sellability  so what do you need to do in order to increase   the dollar value of sellability like you said  before systems super important to increase the   sellability different systems are the employee  system client system Financial marketing and sales   so those are the big ones to get systematized  to have managers in place another thing for   sellability is strategic growth and so again it's  one thing like we said you know we're operating   kind of without you and you should have some  sort of documentation or plan in place of how   this company can grow if you can tell someone  like hey you know what like this is a really   awesome business operating without you I have  this strategic plan of like the people and the   processes these are areas where the company can  still improve and you have this growth potential   because this you know maybe your market share is  small in this area lots of room for growth you can   sell the future growth as like a benefit of your  company and increase the sellability you know does   that make sense where essentially you're showing  them like you follow this a b c d e two years   three years five years this could be you know  it's a two million dollar company now you could   be at 10 million dollars with you know you put  in the work and really expand on the systems and   the processes that we already have in place key  long-term Personnel is another key one for instill   ability if you have a lot of turnover employees  probably going to be a little more difficult to   sell the business if you've got project managers  or general manager you know key sales person   that's been killing enough for you for like  the last four five six years well that's going   to be a big value of your business if you have  generally all new Personnel or you have a lot of   high turnover it's not going to be as easy to sell  because it just shows that it's not a repeatable   system you don't really have a great process in  place for keeping Key Personnel or hiring the   right people to fit and have that team coherence  and the final thing to increase the sellability is   a competitive differentiation and branding so you  have a strong brand trusted brand been around for   a while people recognize you that's going to be  valuable as well as a differentiator if you have   some you know key differentiator you're known  for something in your industry or you service   a specific niche the value of a company is going  to be that much bigger because it shows that you   have a strategic advantage over your competition  and you don't have very much competition because   you've differentiated yourself in the marketplace  however that's you know geographically or you know   by the services you provide or maybe just the  level of projects that you do so a lot that   can go into that but if you get those four things  right your value of your company is just going to   rise and Rise so now for the bonus another thing  to take into consideration and maybe something   you've not thought about is what are you going to  do after you sell your business right and you may   laugh like well I know I'm gonna have whatever  you know pina coladas on the beach and travel   and do all this fun stuff yeah that's cool but  if you've been busting your ass and living the   entrepreneurial dream and going through the ups  and downs and you know it's exciting there's   risk there's this you've got people constantly  needing you and attention and you're you know   going a mile a minute and getting things done and  making big sales and you know very goal and task   oriented like you know someone like myself is too  you love hitting that next level and growing as   a person and leader and all of a sudden you sell  your business and it's like crickets you know it's   like what am I going to do now that's something to  figure out and to get used to so a great way to do   this is take some breaks take a month off if you  can take two months off go travel or start a hobby   or do those things that you wanted to you know if  you want to go screwdriving or want to you know   drive your dirt bike across the hard desert or  whatever your wild dreams are or just even taking   time to just be with your kids or your family or  what have you try to figure out what you're going   to do after so when you make that transition  it's clean one thing I would suggest big time   is giving back as far as like join a non-profit  organization maybe you're building houses maybe   you're managing projects for you know Habitat for  Humanity or something like that there's lots of   different ways where you can still fulfill your  time and still be kind of a manager leader but   in an organization or part-time or something you  know outside of the business world so follow those   things congratulations on like thinking about  this stuff and getting to sell your business if   you want help with systematizing your business  increasing the value getting some of these slps   in place getting some of this awesome stuff  check out description below there's a link to   a course free course how to build a business  that works without you awesome course full   of resources how to start building out systems  how to start thinking about Sops roadblocks to   implementation so all this stuff that's going to  increase the value of your business help you get   become more sellable as a business as business  owner check it out also check out the other   videos that I've got lots of other videos here on  YouTube go check them out see you on the next one