What a Bookkeeper Gets WRONG About Selling Their Business

so from a readiness point of view you describe not being the business not being ready to sell what's the difference between a business that is and isn't ready in your view

I'm going to swap hats into the acquisition side, right? Because we've acquired businesses and we were talking about the community that I run with people who are looking to acquire businesses.

The framework I use is called PROFIT, just because it's easy for me to remember the acronym.

So the P is for processes.

So making sure your standard operating procedures are all in place and that's ready to go everything.

Because what you don't want, and I've got a client at the moment that I'm working with, her key employee has walked out the door because he wanted to go off and do other things and has got so much intellectual property that it's affecting the business.

And

that's so important.

When she brought me in about three months ago, I kept saying to her, let's start doing the operating processes.

Let's start documenting them.

And so we worked through the process and we've got Probably got about 70 percent of them, but there's about 30 percent of them that he has walked out the door with.

And the thing is, I keep saying it's not it's not the BAU and the obvious.

It's the edge cases and the sort of that you kind of want that knowledge written down.

So we talk about processes and we talk about relationships and risk issues.

So your customer relationships, we talk about customer concentration is, you know, your main client, how much revenue does that client bring in, making sure it's not above 20, 30%.

We talk about the owner independence, just making sure that everything doesn't go through you.

And it's, you know, with small to medium sized businesses, it's so easy because you are the business and your brand and all of that.

And it's the point at which you have to start stepping back.

And so I always ask the clients, can you go on holiday for two to three weeks without... doing anything if you can then your business is independent of you so that's really important finance is a big one for you guys right and i think bookkeepers are at the center of that absolutely and i'll you know i'll give you an example why in a minute but finances are your books audit ready right so can someone when they're doing financial due diligence can they pick up the books and and match everything you know management accounts are really important if you can but at least as an entrepreneur you need to know your you need to know your numbers or need someone to support you with your numbers but it's quite scary for a lot of people so don't forget about it then we talk about your team is really important because the person who's acquiring you can't buy you as an individual right you're going away so you need to make sure you've got a team And then technology is the final one, right? So technology is super important, increases your valuation massively, especially now with AI.

And it's asking, is your business AI ready for small businesses? That's really important.

So that's the framework I use to look at businesses.

And just owner independence, 30% valuation, like discount if your business is owner dependent, just that.

That makes sense because they want to buy a true business.

And this is what we speak about all the time is the fact that lots of bookkeepers start their businesses and they make them the center and they make themselves everything.

And then they realize they've created a worse job