This blog will be short and to the point today. My apologies for not blogging for the last several months. I do tend to send out more quicker thoughts via my Twitter and Facebook accounts. Links to these social media pages are on located at the bottom of this website.
If you have done any research on the probabilities of companies selling then you know the numbers published by merger & acquisition, media experts and/or anyone else with knowledge in this area is about as daunting a number as startup survival statistics. So I thought the other day I would ask a valuation expert what he personally thought the statistics were. So here are the statistics from his observation: 10-15% of companies sell to a third-party, another 15-30% transfer to insiders and the rest 55-75% either liquidate or just walk away from their company. Granted that many in the liquidation category are small business owners who only built themselves a job, but its still a pretty scary number to think about. Interestingly his statistics seem to be similar with many published statistics.
So for some 55-75% of business owners, that survived the nearly 80-96% failure rate of startups, they left with nothing more than the sale of assets and/or what money they were able to save for retirement. When I started this company it was my goal to understand all the reasons why the number was so high. I thought if I could discover the reasons then I could prevent a large misfortune from continuing, because, after all, if the reasons were known then how could the number be so high, right?!. What I found and continue to find is, like my last twenty years of investment experience, most reasons have been written and ignored by business owners for the last several hundred years.
I suspect business owners, who end up liquidating, truly want to know the information but they can't get their heads above the weeds long enough to take the time to self educate and/or time to change the business into something transferable. I mean have you ever seen many successful business owners who work only 40 hours a week?
It's the gap I saw several years ago and wanted to find a way to help. It's what motivates me everyday to get up by 5:30 am and keep working often till 11 pm to keep trying to pursue the best methods and solutions. If I didn't have this early persistence I probably would never have developed my new 22 areas and 149 question pre-third party business sale assessment. And I suspect that many business owners could say the same about the pain it took to build their company. But if you are not leveraging some expertise from either a mentor(s), other business owner(s) and/or professional then you fact the statistics alone and hope that you figure it out sooner than later. My hope is that you reach out sooner to someone you can trust. Some things take years to put in place to avoid liquidation. And if you would like more questions please call or email me.
Please share your comments and feedback below. I would love to hear from those who read this far..
John Hamel is the Managing Member of Austec Business Transitions, LLC. helping businesses optimize value relative to exiting their company.