Chung also says that it’s important to identify the buyer as early as possible, so that you can work gradually towards them taking over the reins. That way you will have the best chance of a seamless transition, including the time to properly prepare clients for the change in owner.
Get your structure right
When most people think of structuring their business, they think of the legal structure. However Collins-Woolcock, says that getting your business structure right isn’t simply a matter of working out whether you will opt to be a partnership or a company. Instead, it’s about analysing the day-to-day running of the business to make sure people are engaged and satisfied, and that the people who you’ve identified to take over the business see doing so as part of their natural career progression.
That includes involving them in the direction of the business, making them responsible for bringing in work, and also helping them begin to share in directly in its successes. To do this, he recommends that - instead of focussing all rewards only on the person who brings in new work - any incentives should be shared among all senior people responsible for doing high quality work - from the rainmaker to the technician.
“It’s like building a successful sports team,” he says. “You can’t pay all the money to the guy who kicks six goals a game and neglect your defenders Everyone has a contribution to make and should be compensated directly for how they perform.”
Get your infrastructure right too
Preparing for the day you depart, doesn’t mean simply priming your staff or looking for your successor. It also means making sure the business intangibles, such as its processes, intellectual property and confidential information don’t just reside in your head but are written down, systematised and form part of the property you will pass on.
After all, according to Chung, this is where the real worth in your business lies – in the ability of someone to step in and run your practice without needing any involvement at all from you.
And if you fail to enact these steps?
For consultants in the built environment industry who fail to get it right, there is little chance they will be able to realise the value in their business.
That’s because if all the work only comes through you and your reputation, if you are still responsible for doing much of the work, if you depend only on one relationship or source of work, or if you have no repeatable work, you have nothing to sell. It really is that simple, says Collins-Woolcock.
“It takes 10 years to build a good business and just one year to kill it,” he says.
It may sound like a dire prediction, but if a business owner fails to create something that other people want to buy, that is exactly what will happen.
Your checklist for making your business valuable
To ascertain whether your built environment business has any value, Chung advises that you should ask yourself these five questions.
- How many sources of work do you have?
- How many markets do you play in?
- How many specialties do you have?
- Who holds the relationships with your clients?
- Who will take over your business when you move on?