Sell your business without being taken to the cleaners

Many small business owners are left disappointed - and financially worse for wear - when it comes time to pull up stakes. Here's how to avoid being one of them

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Too many small business owners, including mortgage brokers, are walking away with nothing when they sell their livelihoods, says Pavuk Legal executive principal, Andrew Pavuk.

Pavuk, who’s recently published a book on the subject entitled Nobody Else’s Business, says he first noticed the problem seven years ago while out for a walk and noticing a highly successful local business had closed down.

“I remember…walking down the main road where I live and asking ‘why has this good business just closed?’ When I asked around, I found out the guy couldn’t sell his business – but he’d only had it on the market for six months! He hadn’t built it up to have it ready to transfer to a new owner. It prompted me to think maybe a lot of businesses aren’t prepared for when the owner is ready to move on.”

Pavuk says many brokers fall into a similar trap, either by not doing their homework before taking on new mortgage books or by failing to prepare for when they’re ready to sell or step away from the business.

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“The ultimate goal of owning a business is to take profit from it while you are working in it and to walk away with money in your pocket when you no longer want to…It comes as a very unwelcome surprise to many business owners when they want to stop working in their business that is not worth what they thought it was or that it won’t continue to generate income for them when they take a more hands-off approach.”

The only available option they may then have, he says, is to close the business – and if they haven’t had a strategy in place to take profit from the business along the way, this ultimately means they may walk away with nothing to show for years of hard labour.

Pavuk says Nobody Else’s Business outlines the ‘seven deadly sins’ of being in business – the main one, he says, being a failure to properly understand your business model.

“It really comes down to understanding your business model and your cash-flow, understand how to finance your business, risk (both internal and external)… and how to protect your assets.”

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He says his book provides a ‘road map’ that will help set brokers and other business owners on a path to financial freedom – whether that ultimately means selling, closing, or keeping (but not working in) the business.

 “Building a business is a rewarding achievement and it should allow business owners to live the life they want to live now and when they ultimately move on from working in the business.”

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