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October 28, 2022
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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.

  1. 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.
  2. 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!
  3. 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.

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