One of the impacts of Covid-19 we’ve noticed recently is some children’s activity providers seriously considering their future.
The past 12 months have been challenging in more ways than one. It’s given people time to reflect and think carefully about where they see themselves heading.
When starting up, very few activity providers consider their exit strategy, but it’s an incredibly healthy part of business ownership.
It’s likely in part due to a knowledge gap. They may not know anyone who has sold a business before and our sector traditionally isn’t known for the fast paced ‘start, scale, sell’ attitude of other industries. That said, ICAP has spoken to three active investors/buyers who are looking at the market right now and keen to speak to people willing to sell their business, from those with zero profitability to large franchise network sales. If you’d like more information about this contact us for a confidential chat.
There is significantly more information online about how to start a company, rather than exit one. It’s the exciting part of running a business when ideas are flowing and motivation is high. It may also seem a little strange to consider the end when you’ve only just begun.
So, why sell your activity business?
Understanding your motivations for parting ways with your business is essential to ensure you secure a buyer, price and the right terms of a deal.
Perhaps you don’t think your business is worth that much and wouldn’t be worth the hassle even to pass the business on for ‘free’?
However, wouldn’t it be great to see your programmes, systems and processes outlast your ownership? If so, you could consider selling for a nominal fee to someone who wants to try and turn the brand you created around with renewed energy and vigour.
Regardless of whether you want to sell your business for a large fee or hand it over to someone else for very little, how do other activity businesses know the right time to move on? In reality, it will come about from a mixture of business and personal reasons unique to the owners.
Here are some of the most common reasons we’ve seen in the sector:
1. Retirement
A very common reason for selling a business – coming to the end of your working life you may want to ensure you leave a legacy of some sort and move the business on to someone else rather than simply close up shop.
2. Health reasons
Sometimes owners will receive bad news about their health or they’ve simply neglected it for too long and now need to take priority over the business and they can’t continue.
3. Seeking better work-life balance
Many activity providers startup in search of work-life balance. Many achieve that, others don’t. It’s likely you’ve experienced periods of stress or exhaustion in the past and sometimes knowing when to step back or change your lifestyle is important for your family.
4. Boredom
Sometimes people prefer the thrill of starting something new and when it comes to the day to day operations when up and running, it’s not quite so exciting dealing with the inevitable challenges and growing pains that come with a business. It’s not uncommon to simply want a new challenge and Covid-19 has given time to reflect and understand that.
5. Business has plateaued
If you’ve recognised that instead of growing and developing year on year, you’ve reached a peak and can’t get beyond it. It’s quite hard to see this but frequently occurs and sometimes will need new leadership, investment or impetus.
There are many other reasons you may want to exit your business.
Regardless, it’s important to know a buyer won’t typically ‘fall into your lap’. If you decide to sell or find someone to take the business off your hands, it can take time (average is typically over a year from advertising to legal sign off) so be prepared to start the process ideally before you run out of steam and have a clear strategy in place of how you will go about advertising the business for sale and finding someone appropriate to takeover.
Maybe you don’t want to sell, but need some investment and outside expertise to join your leadership team.
In this instance, taking on a Non-Executive Director or partnering with someone to compliment your own skills could be something to seriously consider. If you’ve ever thought of doing this, now could be a great time to approach someone you know who you think would add value to your business. We’ll aim to cover this more in a future post.
