“If we had another scooter, we could sell more pizza. So the buyer of my business must just buy another scooter, and pay me for the future profits”.
Of course that would never happen. Buyers of, and investors in businesses, buy something which they can add value with their own resources – financial, intellectual, networks, and so on. They look for good deals to which they can add their own value. They do not pay value for something which they will have to make the changing contribution to.
The value add may come around simply on a time basis in the natural course of leaving the business to run as it currently is.
More likely, the buyer will look to adding value.
Missing in the somewhat immature small business community, is the possibility of attracting investment into the small business, not necessarily for the total shareholding, but for only a portion.
Here is a scenario:
There are investors (really there are) who are not interested in running the day to day affairs of the business. They are happy to have a minority interest, but participate in the growth that they are able to bring by way of:
- financial investment
- broad financial management
- networking with their other investments on a preferentially constructive basis
- door opening
- supply chain options
Take a look through that list, and consider where (if anywhere) any of those scenarios might benefit your business, without taking away the control of the business. If there is an opportunity, we should talk.
But that is not all…
Five years down the road, your investor will look at exiting the business entirely, and in five years time, you may (probably will) want to exit as well. You will particularly be interested in exiting if the business is worth ten times what it is currently worth. That sort of growth in value is not just a thumbsuck, it can often be a reality, if you play your cards right.