Being your own boss can be fantastic, or it can be tough going – usually, it’s both. New Zealand is jam-packed with one-person businesses, like tradies, freelancers and contractors. Some work from home, some have an office, some operate from a vehicle. Running your own small business gives you flexibility, autonomy and freedom. But what it doesn’t necessarily give you is a saleable business.
Like every accounting firm in New Zealand, we have many clients who are self-employed. When those clients want to step back from their businesses, selling can be difficult or even impossible. As a self-employed person, you often build up your clientele by providing a superb, personalised service at a fantastic price. It’s not always possible to sell that – a saleable business needs to be something a new owner can make money from. If your margins are small, your customers deal only with you and your business has no major assets, where is the value for the new owner? There’s not much there.
If you’re a one-person operator, that can give you a strong income and a great lifestyle. If it’s working for you, don’t fix what’s not broken. But if you want to build a business that you can sell for a healthy profit, you may need to rethink your approach:
- Are you undercharging? Even if you’re making good money because your overheads are low, that’s not a sustainable business proposition for a prospective buyer.
- Is your business completely reliant on you? If you can’t take a holiday because your business would fall apart without you, it’s not going to survive a new owner.
- Are you doing everything? If you do every single job in the business and you’re not making enough to employ other people to help you, that’s not going to be a valuable business.
- Do you have systems in place that mean you can scale up the business? If your business is limited to its current market, it’s not an exciting prospect.
If you want to turn a one-person operation into a saleable business, I can help you make the kind of changes designed to achieve that goal. It’s not necessarily a simple process, it takes time and commitment. It requires your business to have a strong model and customer database to begin with. The upside, though, is that you could build a highly valuable asset that can create wealth for the long-term.