D’s that drive most business exits, and the one D that should.
In a recent conversation with a global business broker, we debated why 94.6% of companies started failing to sell. This is despite them having survived the early years, grown into sizable mid-market businesses and provided nicely for their founders.
He shared a dreadful reality with me that he referred to as the 6 D’s. Most of his clients looking to sell their companies come to him because of the 6D’s.
Death – the death of the owner or a significant partner in the business
Disease –contracting a disease that prevents the owner or business partner from being able to work
Divorce – a divorce that leads to the company having to be sold
Debt – debt that the sale of the company can only settle
Disenchantment – essentially, when every day becomes and feels like a slog and a grind in which you lose your passion.
Disability – a disability from an accident or some other event that prevents the owner from running the company
Pavlo Phitidis breaks down the 6 D’s for business owners in this Money Show podcast
The antidote to these unfortunate drivers of business sale is the 7th D – Design.
Designing your wealth creation path as a business owner is seldom done, and nobody wants to face their fate. There are four simple steps that a business owner must follow on this path to have success based on their end goal.
- Start with the end in mind – recognise that the ultimate destination is the sale of your business. Businesses are not bought. They need to be built to be sold.
- Set a plan and a path – of the 10,000 companies we surveyed, most that wanted to grow had no growth plan. Only 14.9% of the owners spent an hour or so chatting about growth at a monthly management meeting. Growth is not “hope or luck”. It is architected and constructed!
- Measure up your path so you can track and trace it – deliberately managing growth is your real job as a business owner. By far, most business owners are consumed by daily, weekly, and monthly operational activities; they have no time to lead and drive growth.
Time runs out for us all. Starting with the end in mind and building your business into an Asset of Value™ from the get-go is the best insurance plan you can hope to have as a business owner.