This post is part of a threefold summary of A Better Way 2 Learn Financials’ 2013 Financial Management TeleSummit. Presented by A Better Way 2 Learn, Go iLawn and Landscape Management, the event was held in three, live, hour-long segments Dec. 3 to Dec. 5. This is a wrap-up of the conversation “Building a Business You Can Sell,” held Dec. 3 with guests Mike Rorie and Tom Fochtman.
Building a sellable business goes hand in hand with growing a business—the more valuable and reputable your company, the more attractive you are to prospective customers and, likewise, buyers.
“Build a business enterprise, don’t build a business to fund your lifestyle,” said Tom Fochtman, owner of Madison Valley Ranch in Ennis, Mont., and CEO of Ceibass Venture Partners, based in Arvada, Colo. “If you build a best-of-class business enterprise, funding the lifestyle will be easy and you’ll have a valuable commodity you can sell.”
Fochtman used this mindset as founder of Denver-based CoCal Landscape, which he started from $30,000 with a partner and built into a $33 million company. He sold his interest in CoCal in 2011.
Mike Rorie, CEO of GIS Dynamics, parent company of Go iLawn in Loveland, Ohio, had a “27-year ride” of growing his Cincinnati, Ohio-based business GroundMasters from a one-truck operation to a $30 million regional platform, which he sold to Brickman in 2006.
Of that ride, he said: “If you operate (your company) like a stock, where you make smart business decisions instead of all these personal lifestyle and sacred-cow decisions, you really build it. …Most of us small business owners sabotage ourselves.”
To that end, Rorie and Fochtman made a checklist for how grow a business into a sellable company.
“Be the absolute best”
“You’ve gotta have the ambition, the drive and the passion to be the absolute best of whatever type company you are,” Fochtman said. “You have to strive to be the best and there will be ready buyers for your company.”
Landscape companies, Rorie expanded, should choose only one market to focus on.
“The more you diversify into more marketplaces, the less repeatable, the less scalable that business typically is,” he said, referencing the fast-food industry. “We’re not going to Wendy’s to get tacos.”
After pinpointing your market, Fochtman said to offer what no one else has offered in it and what a range of buyers, including private equity guys, have never seen.
Calculate success
“How many things prove you have this down when you have a system?” Rorie asked.
Repeatable systems, he said, are chief in growing a sellable business—whether they’re in the form of checklist, safety policy or software use.
“The more systems, processes, policies you have in place to govern your business, the more valuable your business is going to be,” he said, and added it’s necessary to have a person on staff who puts those systems in place so you don’t have to. “All of that stuff is creating evidence for when or if you want to sell it.”
Increase revenue by investing in yourself
Rorie advised to put money into consultants so they can tell you lacking areas of your business you’re blinded to.
“Take the time, make the investment, pay the money to get those things implemented in your company,” Rorie said. “Once they’re implemented the return on them is far greater than the cost of them, in so many ways.”
Fochtman said to take advantage of the stable economy as well. If customers like your work and are committed to your business, he said, “Raise your prices now 5 percent.”
“This is serious make-money time,” he said. “We’re in an economy where people will pay. I strongly believe they will pay.”
It’s moves like that, Fochtman added, that mold your company into a sellable business enterprise.
“This is your home run in life, when you sell your business,” he said. “Yeah, you can make some money along the way, but it’s still hard to be a business owner. You deserve a payday when you sell it.”
For more content from the 2013 Financial Management TeleSummit, see “Keys to a profitable, financially stable business,” a summary of the Dec. 4 segment, and “Communicating financials with your team,” a summary of the Dec. 5 segment.
