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Sometimes the Best Place to Start is at the End

Written by Sheryl Nance-Nash

Equity is really the engine driving the vehicle that is your exit strategy,” says Steven Cox, director of resales at The Dwyer Group.

The Dwyer Group philosophy is simple: “Attach your business to a franchise. When it comes time to sell, being a part of a franchise can enhance the overall value of your business,” says Cox.

Why? A franchise follows an established structure, from inventory management, pricing, and debt service, to when to change the oil in vehicles, and more. The new owner will have a road map, a way to see how your business is run and access to financials, and other essential information. Another advantage of being part of a franchise is that with the best employees and all the systems somewhat running on automatic pilot, the owner may actually find him or herself “in the way,” says Cox.

That’s a good thing. A prospective buyer can have the confidence in knowing that the business can run without the present owner.

Paul Schowalter, an owner of a Glass Doctor franchise, shares his story. “My father was a craftsman, he was a carpenter and did wonderful work. He ran his own business for much of his life,” says Schowalter. But when he decided to retire, he got out of the business and sold his equipment for about 10 cents on the dollar. “He realized he didn’t have a business, he just had a job,” says Schowalter. “The important thing about having a franchise in a trade services type of business is you’re developing a business that can be sold because you have vendors, a support network, a way to gain and build market share - you have an established system, you have a name brand, otherwise you have nothing but air.”

Contrary to what might be considered conventional wisdom, The Dwyer Group likes to start at the exit door when planning with entrepreneurs.

“We want to know at the outset what you’re thinking about when you would like to sell. Is it when your business reaches a certain dollar amount, or is it tied to a certain day, like turning 65, or your child’s graduation from college? We will help you plan the steps you need to take to get to the end of the rainbow,” says Cox.

While you’ll get tons of support, you may also get some gentle pushing. “Once we know your goals, it becomes part of our goal to help you to achieve them,” says Cox.

And, when it comes time to sell, you’ll have resale assistance.

“Your business must be in the proper condition to sell—meaning you have accurate books. You should also have a realistic sense of the business’ value, so you can ask for the best price. We’ll help see to it that you can show and talk clearly about the system you followed,” says Cox.

There should be no guesswork about the volume of business and profits for example, he adds.
“That you can show your business was run like a business will be a comfort to a prospective buyer,” says Cox. “They can have a base for their future planning.”

However, if your business is successful, a buyer will quite logically wonder why you are giving it up. Cox says owners should be prepared to share their reason, be it health, family responsibilities, or simply that you are ready to enjoy the fruits of your labor.

Without question, selling what you may have spent a lifetime building will be emotional, but business is business. “You can’t be so attached to your business that instead of selling it like an asset you interview the buyer,” says Cox. Remember, you’re selling a business, not hiring a nanny. Be as objective as you can. “Put yourself in the buyer’s shoes. Do your books back up your asking price? Have you built your business into a dominant player? Will it really run without you?” asks Cox.

When it comes time to sell, the fact that you are a franchise means the new owner can step right in. That fact should also mean you can ask for a better price, he adds. On the flip side, realize, too, that for an independent driven entrepreneur who wants to put his or her own touches on a business, you may not be an attractive buy.

Vinnie Sposari is looking down the road to when he’s ready to sell his Mr. Rooter franchise business.
“If you’re a mom-and-pop plumbing company and you leave, you have nothing really to sell—you were the business. But when I’m done with my business, I believe I will be able to maximize my success because I’m part of a franchise.”
Says Cox, “While you’re with us as a franchisee, we’re big on quality of life. We put the same emphasis on building an exit strategy. We’ll help you so that equity snowball you’ve been pushing up the hill accelerates to a bigger snowball as it rolls down the hill toward the exit.”

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