According to the Office of National Statistics there are 500k – 700k business start ups every year. Of that, 42.5% survive to the end of year 5.
Unfortunately, the statistics are even worse for those business owners hoping to sell, because 90% of them are not saleable. Why? Because there is simply no value in them.
Of the 10% that are left, 80% marketed for sale do not get sold because they are not attractive to buyers.
Of the ones that do sell 95% are sold below market value and for less than the seller had expected.
So that leaves us with the shocking statistic that of all business startups, well under 1% are sold successfully. That translates into only 1 in 2,222 businesses (0.045%).
What accountants can do, but don’t
What are accountants for, if it is not to assist in a successful exit? Our view is that we have three main jobs. Most accountants do only one of them: keep clients compliant with the law and minimise taxes.
We think, during the life of the business, we need to help our clients be successful as people using the tool that is their business. After all, success is a process, and life is a journey. Let’s enjoy the journey, not just work full pelt for an exit and hope to enjoy the time after that.
So occasionally, we have not talked like accountants. We have encouraged clients to spend money on themselves, knowing it would increase their taxes. Sometimes we all need a reward, to know that all the blood, sweat and tears is worth it. Take the family on holiday whilst the kids are young enough to go with you. Build family memories and enjoy your time together. Have a better house, if that is important. Of course, we tell them the cost and help them with the cost benefit analysis. We are keen that they enjoy their life journey.
Getting sale ready
For businesses we can help achieve a market value exit, we will help them systemise their business making it both ready to sell and easier to run. Once it’s working well, we will tune it with regular targeted discussions. It’s amazing what a few small adjustments will do over a 3-to-5-year period, once those adjustments start to accumulate, like compound interest. We discuss a range of valuation methods and produce a blended valuation and target that our client is happy with, based on their needs and wants. And then monitor and re base ways of achieving what they want.
That way after-sale time can be spent well and worry free. During the process up to sale, we make sure they have a good quality of life and that they are compliant with the law and paying the minimum in taxes.
Whilst we acknowledge that some businesses won’t be sellable, we can still make sure that our client’s Iife is better whilst they are working, and they maximise what they can achieve when they stop. We think that is also our job.
So far, we have enabled 4 successful sales of over £1m out of a client base of 100 and few under that figure. Better than the ONS figure of 0.045%.
How we can help you
We have been here before and we have all the tools and expertise to help you create plans that are agile, flexible and resilient, so that you will have strategies in place to overcome the unexpected, mitigate their effect, or avoid them. We can help you monitor the results, model any changes you want to make, listen and discuss with you the best ways of achieving your goals. My book Understanding the Numbers: Make Your Business and Your Life Better helps you avoid mistakes that lowers business value, that I’ve seen time and time again.