Have an Exit Strategy
In November just past, my family and I moved house. After sixteen years accumulating all sorts of stuff, I was dreading the prospect of packing up and hauling boxes. Apparently, moving is one of the most stressful experiences and I can’t tell you how pleased I was when I was introduced to Alan Delaney.
Alan is the owner of AAAB Mini-removals. From single items to full houses, they have been specialising in household furniture removals since 1996. In quite a competitive environment, Alan and his team of three stood out for me with an amazing service.
I had never used such a service before but my main expectation was that my belongings would be handled carefully. I also expected that they take care of the property that I was leaving and going to. And of course, all of that had to be done at a fair price. With respects, I didn’t want to use ‘a man with a van’, as I was concerned about adequate insurance cover.
If I had been asked to give feedback on my experience, I would have scored them at 100%. They disassembled beds and tables… they carefully wrapped glassware, crockery and ornaments diligently… and handled my guitar as if it belonged to James Taylor! They did the same in reverse in the new home while we got on with more trivial stuff.
Alan has a strong quality service ethic and would never tolerate the words ‘ah sure it’ll be fine’. Consequently, the team are trustworthy and conditioned to deliver the best quality service every single time. He recognises that quality drives repeat business. But he also knows that poor quality costs money.
I was impressed that Alan was fully hands on himself and supervised the whole production. But that too made me think – and it encouraged me to have a chat with him.
Like most SME owner/managers, Alan has an ambition to eventually sell his business. So how do you maximize the value of your business to get the best price when that time comes?
Aside from asset value, a potential buyer will value the business based on such things as recurring income… future revenue… the team… margin… contracts… customer base… reputation… and so on.
My concern for Alan is that the business is overly dependant on him personally. While his passion for quality is admirable, his need for control at an operational level is stunting growth. He can only be on one job, in one place at a time. Acquiring more trucks… more customers… new territories… are all futile activities right now, as Alan continues to personally attend every single job.
In the meantime, it must be stressful for Alan when going on holidays. As with other SME owners that fall into this trap, I’ll bet their phones are always on!
The starting point here is to change your mindset. What can an SME owner do to create a ‘machine’ that is driven by other factors and not so reliant on the direct involvement of the owner? What can you do to give yourself peace of mind that standards don’t slip when you’re not there?
Firstly, it’s about standardising the business and making it run effectively even without the owner’s direct involvement.
1. Having a clearly defined Mission Statement that articulates the service standard will help to ensure consistency. At the very least, take time to write down ‘what good looks like’ for every aspect of your service or product.
2. Involve your team. Engage them in doing this exercise and get their buy-in. You’ll be surprised at how much they’ll have to say in terms of good ideas. Communicate the defined standards to them and incentivise them to achieve them every day. (Also make sure that consequences for not delivering are equally clear – although don’t major on this point!).
3. Consider future potential buyers of your business. Who might they be? What might their purchase criteria be?
4. Are there some members of your team that may have a future interest in a management buy-out? If so, is now the time to start that conversation? Is there a deal to be done today whereby a small stake is negotiated with them now… that might grow each year linked to performance? (Capped at whatever appropriate level until a full sale in say ten years?)
5. Regardless of whoever, consider the potential buyers of your business… what changes do you need to make so that it will be more attractive and valuable to them?
Maximizing the value of the business will be done on the back of great sales, margin and cost control. AAAB have great contracts with some key players already. Storage businesses such as U-Store-It are an obvious partner – and already send business Alan’s way. And other removals companies like Oman Beverly Smyth also pass business his way.
But right now, it’s all reactive and coming from word-of-mouth. That is indeed admirable but I would much rather see Alan having an additional sales strategy that is proactive.
Here are some simple steps for now…
1. If you’re going to invest time in proactive sales, then you want to have the best chance of success. Make a list of preferred customer types. What are the criteria of an ideal customer. Who and where are they?
2. Using a professional sales approach, go and sell to them. This sounds obvious but for a company that has relied on word-of-mouth in the past, this is a big deal. So I would strongly encourage engaging the services of a skilled salesperson. Or else get professional training in advance. After all, success is more reassuring and motivational than failure.
I have no doubt that there are lots of SME owners that fall into this trap. You owe it to yourself to reap the rewards of your life’s work. De-personalize your business.