Sam Penny (00:31)
All right, ladies and gentlemen, welcome to this session of Built to Sell. And today we're going to go deep on probably, reckon, one of the most misunderstood but mission critical parts of selling your business. And it's all about de-risking the deal. Now, when I say de-risking, I don't mean playing it safe. I mean making your business bulletproof in the eyes of a buyer so that when they look at your numbers, your team, your operations, your transition plan, they're not in their head.
instead of scratching it because here's the truth. Buyers don't pay top dollar for potential they pay for confidence. They pay for certainty they pay for businesses that feel stable, predictable and transferable. You've probably heard this before people buy on emotion and justify with logic and in business sales that emotion is fear and the logic is risk. So
This session is all about helping you neutralize that fear and tip the logic in your favor.
This is not theory. I'm going to walk you through the real practical things that buyers really care about. I'm going to show you how to remove the hidden deal killers that drag your valuation down or even scare buyers off completely. Whether you're selling this year or just thinking ahead two to three years, this will put you on the front foot. I'm Sam Penny. I'm coach for the brave. And if you're here, it means you're not looking for the average deal or the average exit.
So look, let's make this business the one that buyers want to fight for not walk away from.
Now, if this is your first time joining one of these sessions, welcome. And if you've been following along with the Built to Sell series, it's great to have you back. As I said, my name is Sam Penny, and I work with business owners like you who are ready to stop being the bottleneck and start building something valuable, transferable, and sellable. Now, a bit about me, I'm a business coach, but not the theory kind.
I'm not here to give you surface level tips and also empty motivation. My job is to help you get serious about building a business that can thrive without you. Whether, look, if you're looking to sell in the next 12 months, fantastic, or you just want to get your life back while increasing your valuation in the process. I've helped founders restructure their operations, shift from chaos to control, grow their profitability.
and create strategic exits that don't just make them all money. They give them options like real freedom. I come from the real world of building real businesses, ones with staff, ones with customers, marketing challenges, financial pressures, all that stuff that never shows up on the highlight reel on Instagram. And I know how hard it is to run a business and I know how much harder it can be.
to exit one cleanly. You see, I've been running businesses for 25 years. I've bought some, I've sold some, I've built from scratch. I've built a couple of companies to more than a million dollars a month. And that's why I created this webinar series. And it's why I started the Built to Sell, Built to Buy podcast. It's to equip you with the tools, the thinking and the strategies that actually matter when it comes time to sell or grow or just get your weekends back.
So if you're here to increase the value of your business, make better decisions and remove the blind spots by say, you're in the right place. Now, before we get into the meat of today's session, I just want to quickly mention something. And I think this will be valuable to you because this is great for between these webinars and it's called the built to sell built to buy podcasts. So every week I sit down with people who've either bought, sold or even built extraordinary businesses.
And we unpack the real stories behind the numbers. Now, this isn't just your typical podcast full of hype, recycle business cliches. It's actually the hard questions and the real questions. And it's the behind the scenes stuff. You know, the stuff that you need to hear before you list your business or step into an acquisition. What I talk about is what actually drives the value in the eyes of a buyer.
some of the deals that have fallen apart at the last minute, and some of the seller regrets after the fact, but also how buyers interpret risk and how both sides can make smarter, cleaner decisions. So if you're a business owner thinking about your exit or even just trying to get more freedom from the day to day, there's something in there for you. And if you're an investor or an acquirer, we give you a front row seat to spot the opportunities.
Now you can find the built to sell built to buy podcast. It's on Spotify. It's on Apple podcasts and all the other usual places you might get your podcasts. But more importantly, it ties directly into everything we're talking about here today. And because every guest, every story, it reinforces the core ideas. If your business still relies on you, it's not a business, it's a liability. And that's the shift we're making. That's what we're here to build. All right, now let's
walk through what we're going to cover through today. Now, this isn't going to be a theoretical chat about business exits. This is real practical stuff and stuff you can action today. And if you're serious about selling your business or making it run better without you, these are the moves that actually shift the dial. So here's what we're going to cover today. First, we're going to start with what makes buyers walk away, because it's not always what you think. And
You might assume it's the price of the profit or the timing, but more often it's uncertainty and buyers don't want to take a leap of faith. They want to walk into a business that feels safe, that feels solid and stable. And I'm going to show you the red flags they're watching for often before you even realize that they're there. Second, we're going to look at how to remove the hidden risks. So these are the things that you might not even notice.
because they're just how the business runs. But to a buyer, they stick out like flashing warning lights. And we're going to go through how to surface and fix them before they cost you real money or even the whole deal. And the third part, I'm going to walk you through the five deal de-riskers. These are the five key areas that every owner needs to tighten up if they want a clean exit. So think of this like a checklist. And it's a checklist for buyers.
that are running in the back of their minds. If you've nailed these five, your business is instantly more attractive and more valuable. Next, we're going to dig into some real world case studies so that you can see what this looks like in practice. And then I'll show you a before and after. So what the business looked like before they de-risked it, and then what we changed and that impact that it had to the valuation.
And finally, I'll show you where to start because if you're like most owners, you already know that there's a few things that aren't buyer ready, but knowing where to start and what turns this from overwhelming to achievable. So whether you're 12 months away or still in growth mode, this session is exactly designed for you. It's going to give you clarity on your position. And if you're in the process of selling your business,
you're going to get better offers, you're going to get smoother deals, and you're going to get more freedom. So sounds pretty good, doesn't it? All right. First, we're going to talk about fear, because fear is actually what kills deals if you're trying to sell your business. And I'll tell you what, it's not the obvious kind. I'm not talking about buyers being afraid to spend money or afraid to take a risk on a business in general. I'm talking about the kind of fear that creeps in quietly.
The kind that starts with a, you know, that gut feeling that something just doesn't add up. And here's the line that I want you to remember. A buyer doesn't walk away because of the profit. They walk away because of the risk they don't understand. Now I want, I want you to let that sink in. Cause you could show them half a million in profit. You could show them a million in EBITDA.
But if they sense any instability, confusion, or things that just, you know, perhaps feel too dependent on the owner, the deal dies. Or the offer, and if they do make an offer, it's going to come in way under what you hoped for. So let's break down what those risks look like. The first one is the owner dependency. And this is probably the number one red flag. If your name is...
all over the ops, if it's over client relationships, the decision making, you're in every single meeting. It's really not attractive to a buyer. It's actually scary and buyers don't want to buy your job. The second part is that you have no clear system. So if your processes live in your head or you know, there's a couple of ad hoc spreadsheets that doesn't scream.
transferable business. It screams absolute chaos. And no matter how profitable you are, chaos is going to cost you. Now, the third part is inconsistent financials. So if the books are messy, if expenses fluctuate wildly, or if your profit line can't be trusted, buyers start assuming the worst. And that is so true. Any unexplained numbers, they don't just raise our eyebrows, they raise doubt.
Now the next part is customer concentration. And I covered all of these in my last webinar, which was the eight value drivers. If one of your client accounts, for example, has say 30 or 40 % or more of your revenue, the buyer is going to ask what happens if they leave? And even if that client is loyal today, concentration really creates fragility. Now let's talk about team risk because key
person dependency. If you've got to say a single team member who's holding everything together, they might be the techs, the tech expert, they might be the sales closer, they might be the ops guru. That's not a strength. That's a vulnerability because buyers are going to ask, well, what if they walk? And the next point is having an unclear handover. So if there's no clear path to transition,
If there's no training, if there's no documentation, if there's no continuity plan, that buyer has to imagine themselves drowning in the business on day one. And honestly, nobody wants to pay top dollar for a headache. So here's the formula. It's pretty simple formula. More risk equals a lower multiple. Too much risk equals no deal at all.
This is the game we're playing and it's not just building value, but protecting it because every one of those risks, it chips away at what your business is worth. And to be honest, the frustrating part, a lot of these are fixable and with the right focus, they don't take years to resolve. They just take your intention as a business owner. So now that we know what scaring buyers, let's flip it around. Let's actually look at what they're hoping to find.
when they look under the hood of your business. So we're going to reframe this for a second because most business owners think buyers are buying profit. They're not. They think it's all about the EBITDA as if the numbers on the bottom of your P &L, that's the beginning and the end of the conversation. But that's not what buyers are actually buying. Yeah, sure, EBITDA matters. But what buyers are really purchasing, they're paying for confidence.
They're buying continuity and they're buying control. So I'm going to break that down. Let's start with confidence. They want to believe that the numbers are real, that the team will stay and that the customers won't turn. That's your marketing and sales engine. You know, they want to see that that's going to keep running because confidence is a fuel of every deal. No confidence, no deal or worse, really a deal full of claws.
clauses, clawbacks, anxiety. Who the hell wants that? Now let's move on to continuity because this is a big one. Buyers want to know that the moment the ownership changes hands, the wheels aren't going to fall off. They want to see a business that can run without you or any other single point of failure. They want to know that the operations are going to be smooth, the delivery is seamless, and clients won't even notice a change because
Geez, we see it too often when there's a change of ownership, clients leave, staff leave, continuity equals a peace of mind. And the third point that buyers are really buying is control because buyers are looking for levers that they can pull. They don't want to buy a tangled mess that they've got untangled. They want to see if they put money into say marketing, they get
X in return and that if they reduce costs, they know that they can lift margin control. You have to remember means predictability and predictability is what they're really buying. They're not buying possibility. They're not buying potential. And here's the punchline. You have to remove the mystery. You need to prove that it runs without chaos because chaos kills deals. Uncertainty.
lowers multiples and nothing screams risky like a business that only works when you're at the wheel. So here's the mind shift mindset shift that I want you to make right now. You need to stop thinking like an operator and you need to start thinking like a buyer. If you're going to buy your own business tomorrow, what would scare you off? What would make you feel fragile? What would
you demand a discount for. And that's where the work is. And the good news is, obviously there's going to be good news from today's webinar session, you can fix it. And when you do, the value of your business doesn't just increase, it becomes defendable. So let's get tactical now. We're going to go through the five DILD riskers.
Now that you understand what scares buyers off and also what they're really looking for, let's actually get clear on how you reduce that risk because risk doesn't have to be something vague or unfixed or a cloud hanging over your business. In fact, the best part of this whole conversation is this. You can control most of the risk. You need to know where to look and what to fix. So I want to give you the 5D.
the five deal de-riskers. This is the framework and the exact framework that I use with my private clients when we're trying to get their business exit ready or just really trying to free up the owner and make them freedom ready. So here they are. Let's move on to the first one. We need to remove yourself, the business owner. And this is always one of the first and it's for a reason because if your business relies on you to survive,
It's not a business. It's a job with overheads. Buyers want a business that runs without you, not because of you.
we're always going to look at ways to reduce your involvement. We need to build real independence into your operations. Now, the second part, we need to systemize the business because I said it earlier, chaos is a deal risker and systemizing isn't about being a bureaucracy. It's not trying to be like a government organization. It's about predictability. We need to document your processes.
And we need to build SOPs, your standard operating procedures, because we need to automate what can be automated. And this is really what gives buyers confidence that the business will run the same or even better without you in it. The third part, we want to lock in recurring revenue because if you're starting from zero every single month, that's stressful for you, but also potential buyer.
If you're having to go out and make new sales every single month, that's not cool. That's not where we want to be. The more revenue that you can lock in through things like subscriptions might be retainers, contracts, memberships, the more stable your valuation is going to become. Because remember predictability equals a higher multiple. Now, the fourth part is that we want to clean the numbers.
tell you what, you're gonna be shocked at how many deals fall over because the financials are sloppy. Honestly, buyers don't have time to interpret the chaos, because they're, they should be if they're a good buyer, they're looking at multiple deals at any one time. And if your P &Ls are a mess, or if your EBITDA has mystery adjustments, you're actually bleeding the trust. So remember, clean books builds credibility.
Okay, now the fifth part here is that we want to plan the handover because most sellers, they don't think about the handover until the deal is signed. But by then it's too late. And buyers know exactly what happens post acquisition, who's doing what, how long you're staying on what support looks like, they need a clear 90 day handover plan because that can turn a hesitant buyer into a cov
into a confident one. Now, here's the magic of this framework. You don't need to be perfect. You just need to be better than the next business that they're looking at. Buyers, rarely find a perfect business. They're choosing the least risky option for what's available. So if you address just say three out of these five areas properly, you're pretty much already ahead of most sellers. And
If you inhale all five, well, wow, now you're in the driver's seat. Now you're going to get multiple offers. You're going to get much cleaner terms. And I'll tell you what, you're going to get a far better valuation. All right, now let's start with the most important person and honestly, the most confronting. This is the most confronting de-risker of them all. It's you. And here's the hard truth. If the business needs you,
It's honestly, it's not a business. It's a job with overheads. Now I know that might sound a bit harsh, but yeah, I said it with some love because this is where most founders get stuck. They've built a great business. They grow the team, they win the clients and in the process, they just become the glue that holds everything together. And yeah, sure. It feels good for a while. You need it. I get that. You're the center of it all, but
from a buyer's point of view. Remember, we need to see it from the buyer's point of view. That's terrifying. And here's why. Because just imagine if you're stuck in the weeds, you're making the key decisions, you're managing clients, you're closing deals, you're running operations. And then when you leave, the buyer, they're stepping into a hole and that hole has a dollar value. And I've seen it time and time again.
You see founders, they're working 60, 70 hours a week. And honestly, they're holding it together by sheer willpower. And then when they go to sell, they realize that they are the business. And a buyer doesn't want to buy you. They want to buy a machine that works without you. So the first step to de-risking your business, simple to say, but I'll tell you what, it is so challenging to do.
First up, need to build a team that runs the day to day. You need to delegate the sales, the operations, the finance, you know, the real core stuff. And you need to create the leadership underneath you, even if it's just one person to start with. So let's get a little bit tactical. I want you to ask yourself, how many hours do you work in the business each week? And
Would the business break if you took a month off?
And who makes the critical calls when you're offline?
Your answers to those questions that there is really going to be the buyer's risk profile. And here's what I tell my clients, the freedom for you equals the confidence for your buyer. The more independent you are from the business, the more valuable it becomes. And the beauty of this is that even if you never sell, just imagine removing yourself. What time that gives back to you.
It gives you a breathing room. gives you a business you can actually own and not just operate. So this isn't just about selling. It's about building something that works and it grows and it creates wealth without you having to carry it every step of the way. And that's where we want to go to. And I covered all of this making your business owner independent in one of my previous podcasts and webinars. So go back, check that out. Not right now. Do it a little bit later.
All right. Let's move to the second deal deal. Dresca. This is a big one. Systemizing the business now. If you're like a lot of founders, you might already be tuning out to the word systems. Tell you what. Whenever I hear systems or systemizing the business, it sounds pretty corporate. It sounds pretty boring. Sounds bureaucratic. But I know you don't want to spend days writing SOPs, flow charts, all that sort of stuff. I get it.
But I want you to reframe this because systemization isn't about the red tape. It's about freedom and it's freedom for you and it's confidence for the buyer. And here's the golden rule. If it's not written down, it doesn't exist. Remember buyers aren't just looking at what your business does. They're asking, can it keep doing it?
with the current owner. And the only way to answer that is with clear, repeatable, documented processes. firstly, what do I mean by systemizing? Well, we need to document your core processes, things like your sales, your onboarding, your delivery, your customer service, you know, those really core things. And these should not live in your head and they shouldn't be reinvented every single time.
someone joins your company. The second part is that we want to automate a lot of the repeatable tasks. So here's where I want you to use tech to eliminate human error and also the inconsistencies. Every automation is one less thing that can go wrong post-sale.
And the third point, you need to cross train your team members. So if only one person knows how to do something, it's pretty big risk. I need you to spread the knowledge and I need everyone to back each other up. And the fourth point here is that we need to build a library of SOPs, your standard operating procedures. Look, these things need to be sharp. They need to be short.
but they also need to be usable documents. We're not trying to make war and peace manuals. We don't want to have a folder that's going to sit in the bottom drawer that's just going to collect dust and nobody's going to read. We need things like checklists, screen recordings, templates, pretty simple stuff. So the key metrics are here. The number of documented processes and the percentage of tasks that are automated
or delegated. And that right there is a key metric.
We don't need hundreds of of documents. We just need to start with probably the first 10 most critical workflows that your business does. And then I want you to write them down and write them down clearly. And I'll tell you what, you'll be amazed how quickly this builds by confidence. So let me give you an example. I had a client once, they ran a professional services firm, everything. I'll tell you everything.
was in their head. a team member had a question, they always came to him. If a client wanted something custom, he had to figure it out on the fly. This guy, I'll tell you what, he was a brilliant guy, but this was completely unscalable. So together we spent 90 days and we documented the 12 key processes that ran the business. We created a really shared knowledge base and
We shifted the accountability to the team. went from founder reliant to a process powered business. And when it came time to sell, the buyer said, wow, I've actually never seen a service business this tight. And it was so great to see. And I'll tell you what, the multiple jumped and the deal moved fast. And that's what systems do. They turn your chaos into confidence. They, they remove doubt. They make your business.
look like a machine, not a personality. And remember, systems don't have to make your business boring. They just need to make it repeatable and repeatable is value. Okay, let's move on to de-risker number three. And this one speaks directly to the buyer's psychology because when buyers are evaluating a business, they're asking this, what do have to do to keep the revenue coming in?
And if the answer is start from scratch every single month, that as you know, is a real problem. So the third lever to reduce your buyer fear and boost your valuation is this. We want to lock in recurring revenue. And here's the key idea. Buyers don't want to chase sales. They want sales to arrive and honestly say to you, recurring revenue doesn't just make your business easy to sell.
It also makes it easy to run because it's predictable. It's stable and it smooths your cashflow. It gives you business momentum without relying on constant hustle. So how do you create it? First part is convert your once off customers into repeat buyers. So can you turn a one-time service into a monthly retainer? Can you offer
an annual service agreement or maybe a care package. Just a simple shift in your billing structure can create repeatability. Now, the next part, can you add things like subscriptions retained as a contracts? So if you're in product, look at memberships. Can you create replenishment plans or subscription boxes? If you're in services,
Maybe consider fixed fee retainers, licensing models, or even a SaaS style pricing, software as a service style pricing. The third part is you need to build a loyalty program that sticks. Even if you can't formalize a recurring billing, you can incentivize loyalty. know, things as simple as a punch card, VIP programs, know, the coffee cards at the local cafe.
referral bonuses, whatever keeps people coming back. That's what we want. Now here's the key metric for this. The percentage of your revenue that's recurring or contracted. I like to see it honestly at about 40 to 60 % if you can get it to that. And it gives the buyer breathing room. They're not walking into a cold engine. They're walking into something that already has momentum. And here's the effect.
that it has on the evaluation. So here's, let me pose you with this scenario. Imagine two businesses, they're both doing half a million dollars in profit. The first business, it's got 80 % revenue that's coming in through recurring revenue. The second business only has 25 % recurring revenue. They're both doing the same profit, the same EBITDA. But the first business, it's more predictable because it's more bankable, it's more scalable.
And it's going to get a higher multiple. And look, it's plain and simple. So don't underestimate this one. Even small moves towards recurring revenue can have a big impact on buyer confidence. And if you think, well, Sam, my industry doesn't suit recurring a challenge here. I'll tell you what, it probably does with some creativity. Almost every business has something they can package. They can systemize or structure to bring
recurring revenue back without chasing it. And again, even if you never sell, recurring revenue makes your life easier. It gives you stability and stability is something both founders and buyers crave big time. All right, let's move on to de-risker number four. And this is probably one of the most common and probably the costly killers of deals.
It's messy numbers. can't tell you how many business sales I see fall apart because the financials just don't add up. Or worse, they might, but they're so unclear that buyers honestly lose trust before they even get to the due diligence. And here's the simple truth, messy books kill deals. You could be doing great profit. You could have
a solid team, some great clients, strong growth. But if a buyer looks at your P &Ls and can't tell what's going on, if your balance sheet is full of just maybe weird lines, items, half explained adjustments, they're out. Why? Because remember, uncertainty equals risk and risk gets price in. The messier the numbers, the lower the multiple or worse, the buyer just walks. So this derisker
is about getting your house in order financially. And here's what clean numbers look like if you're going to go sell the business. But even if you're not, it's just so important to do this. You need to get three years of clean categorized peniles. Don't just export it from zero quick books. You need to structure it. Group it like with like. Make it easier to read. And I want you to remove the one-off anomalies. You need to highlight
any seasonal patterns and you need to show the trends. The second part is that we need to normalize the EBITDA and clearly explain the adjustments. If you're adding back one-off expenses or owner perks, it's fine, but you need to do it clearly because buyers expect adjustments. They just don't want to feel like you're hiding anything. The third part,
Is the balance sheet, it's got to be clear. It's got to be clean and it needs to be reconciled. We don't want to see personal expenses in there. We don't want co-mingled accounts. We don't want phantom assets or unexplained liabilities. It needs to reflect the true health of the business. Not just what your your accountant could rush out a tax time. I see that way too often. The fourth part.
is that we need to separate the business and the personal expenses. And this is a real big one because I know plenty of owners, they run a few personal things through the business, but look, we all get it. We've all done it. But if it's not cleanly separated, it becomes a real red flag. A buyer doesn't want to feel like they're funding your lifestyle. So here's the key metric for this part.
Have an accountant reviewed financials, not just for tax, but for clarity. Ideally, you've had a review done before you've got the sale in mind, not just for compliance. And here's a little tip. Think like a buyer. Would you buy your business based on the clarity of the numbers in front of you?
Would you trust them enough to put hundreds of thousands of dollars or even millions on the line? If the answer isn't a fast yes, you know you've got some work to do. Now, look, I know that this can feel tedious and I know it's not sexy, but here's what's exciting. If this can be any more exciting, clean financials build trust faster than any sales pitch.
When your numbers are clean, when they're clear, when they're well presented, you stand out because your deal becomes easy. It becomes the safe bet. And that's where buyers compete and are going to pay more for it. Okay. Let's move on to the fifth D risker. We're going to wrap it up here with the five deal D riskers. This one really rarely gets talked about, but it's absolutely critical if you want to make buyers say yes.
with confidence, you need to plan the handover. owners, they treat the handover as an afterthought. They think, ⁓ I'm just going to figure that one out once the offers come. Or worse, the buyer can work it out once they own it. From the buyer's point of view, honestly, the transition is part of the deal. And if it's not clearly planned, it creates doubt.
Now here's the mindset shift I want you to make. A smooth handover is part of the sale. It's not after the sale. So let's look at this from the buyer's side. They're about to drop, say, a few hundred thousands of dollars, maybe millions, to take over a business that they've never run. They don't know your staff. They don't know your clients or your systems. They're excited.
But underneath that excitement, there's some real anxiety and they're looking to you to remove that anxiety. You want to paint a picture of exactly what the first 30, 60, 90 days looks like post settlement. Because when a buyer sees that you've thought through it all, when they can visualize the transition, they breathe easier. They're going to relax. And that's when
they move forward. So what does the strong handover look like? Well, you should build a 90 day transition plan. And here's how I want you to break it down. What will you do during that time? What does support look like? How often are you going to meet? And what milestones will you help them reach? The next part is that we need to list the key responsibilities.
And who owns them. So make it clear what tasks are already delegated and what handover steps remain. I want you to give the buyer visibility over how the team will support them. Now the next part is that we need to create some onboarding docs for the buyer. And yes, just like you would for a new team member, a buyer's stepping into a new environment. You have to remember that.
I want you to help them on board like a pro. You need tools, you need contacts, workflows, vendors. You need to give them the map. So then we need to map out what day one looks like, what week one, what month one looks like. You need to show them how it's all going to unfold. You need to eliminate the guesswork. The clearer that picture, the more confident they're going to feel.
Now the key metric for this one, I want you to have a handover pack that's ready before the buyer even asked for it. And it can be a simple one-pager PDF with a timeline, some key contacts, weekly checkpoints, FAQs, but this makes a huge difference. It shows you're not just trying to exit, you're trying to set them up for success.
And this does two powerful things. Firstly, it reduces the bio fear and it positions you as professional, not just an opportunity opportunistic seller. Well, that's a big word for me. And often this little bit of planning, it's going to be the difference between getting an offer and getting a great one. So let me say this clearly.
If your buyer has to imagine how the handover will work, you're asking them to imagine risk. So don't make them fill in the gaps. You need to show them, you need to lead them, and you need to guide them. And that's how you make them say yes. All right, now.
Let me bring it all together.
Now we're going to, ⁓ I'm going to show you this, this case study first. This was absolutely fantastic. So this was a client, ⁓ that I worked with This was a case study. So before the owner was working 60 hours a week, they didn't have any standard operating procedures in place. had two owners, sorry, two clients that were generating.
more than half of the revenue and there was no formal handover plan. They had an EBITDA profit of $400,000. So it was a good business. But because of those things, their multiple was only 2.4 times profit. So that gave them a valuation of $960,000. We then worked with the owner.
Firstly was to reduce their owner dependency. And what we did was that we reduced it down to 10 hours a week. We then worked on their SOPs and we documented actually 18 core processes and tasks in their business.
And we're able to achieve their top five clients of only 45 % of the revenue. So we went from two clients producing 50 % of the revenue to five clients producing 45 % of the revenue. And we actually did this with the 90 day transition. Um, and it was a great playbook. The EBITDA stayed the same. weren't working on the profitability of the company.
But what we're actually working on was the multiple because there's two ways to increase evaluation of a business. You can increase the profit or you can increase the multiple. So by increasing the multiple and achieving those four things, we increase the multiple from 2.4 to 3.1 and that actually returned evaluation of $1.24 million. So
That's a $280,000 uplift in their valuation. And that's from a business still doing the same profit. It was absolutely fantastic. It was stellar.
All right. Now we've covered a lot. You've seen the risks, you've seen the fixes, and you've also seen how powerful the valuation uplift can be when you do this properly. But the obvious question is always where do you start? Because let's be honest, when you deepen the day to day of running your business, I know it's hard and I know it's hard to work out what are the biggest risks because you're always you're too close to it.
So what feels normal to you might look like absolute chaos to a buyer. And when you think
What you think is a strength, it might actually be a red flag. And that's why I've created this. It's called the Business Readiness Report. It's a tool I use. I use it with all of my clients. It uncovers the hidden risks in their business, and it gives them a clear roadmap forward. It's not a real fluffy, crappy quiz or anything like that. It's really structured, and it structures the eight value drivers that buyers really care about.
So it covers things like your financial performance, your growth potential, recurring revenue, owner independent systems, customer concentration, competitive advantage, and claim books. This thing only takes you five minutes to complete, but at the end, you're going to get a score across all of the eight value drivers. It's going to break down where you're strong, but also where you're exposed. So what are your key risks? And it's going to...
customized an action plan for you. So all you have to do is go to sanpenny.com forward slash readiness. You're going to walk away with two really powerful reports, the business hour readiness report and the business valuation report. You're going to walk away with clarity. You're not going to be guessing. It's not theory. These are real insights into what's helping you valuation, but also what's
hurting it, what's dragging it down. This is also a powerful step to take before you go and speak with a broker or a listing your business, because you don't want to start conversations with buyers before you're carrying all of these silent deal killers. You want to come to the table prepared. You want to be strong. You want to be clean. You want to be confident.
if you're planning to sell in two years, three, five years time, even better, even more perfect. You've got more time to get this fixed. You've got more time to fix the cracks before they cost you. So if you're serious about building a business that buyers want to fight over, not walk away from, look, just take five minutes, grab your readiness report and let's make a plan. The work you do now,
can be the reason why you walk away with hundreds of thousands of dollars more later. All right. Let's bring it all together. You've seen the five key moves that can take a good business and turn them into a bio magnet. They're not flashy. And they're certainly not complicated, but I think they're just really powerful and they work. So let me walk you through them one more time. The first part.
Remove yourself from the weeds. If your business needs you to survive, it's not a business, it's a liability. I don't know how I can say that more plain and simple. Buyers want something they can own, not something they have to operate. They don't want to buy your job. Plain and simple. You need to remove yourself from the business. The second part, you need to systemize your business.
document the things that get done. You need to build your SOPs. You need to automate what can be automated. The more predictable your operations, the more transferable your business becomes. And the third part, you need to lock in the recurring revenue. So stop starting from zero every month. You need to find ways to create predictable cashflow. Things like subscriptions, like retainers, memberships, contracts. Remember,
predictability equals higher multiples. Said it a few times, but it's so true. Number four, we need to clean the numbers. Sloppy financials are a deal breaker. Get your P &Ls clean. Normalize your EBITDA. You need to work with your accountant to present the numbers that buyers can trust. And the last one, the fifth one, you need to plan the handover.
The deal doesn't end at settlement because it begins there. You have to remember that. Create that 90 day plan that's going to make the buyer feel like they're guided, like they're supported and set it up to win. Remember a smooth handover removes doubt and it's going to unlock higher offers. Now here's the bottom line. Risk up, multiple down.
Pretty simple equation, but seriously, that's the equation. The less risk in the deal, the more your multiple is going to go up. So this is how you sell smarter, not harder. This is how you go to market with confidence and you come out with a deal that you're proud of. And even if you're not ready to sell yet,
The beauty of these de-riskers is this. They give you back your time. They're going to stabilize your operations. They're going to make your business better, not just more sellable. So if you only remember one thing from today, let it be this. You don't need to grow your business to sell it for more. You just need to reduce the reasons buyers say no.
All right. Now, hopefully by now you've got a clear sense of what's working in your business and what needs tidying. Maybe you're thinking, yeah, I'm still too involved or gee, I really need to get my financials cleaned up or I don't even have a proper handover yet. Well, you know, it's completely fine. Most businesses aren't buyer ready, but when they start this journey,
That's why we need to be prepared. And here's the thing. You don't need to figure all this out alone. If you want help doing this, the real work of de-risking your business and making it buyer ready, I'd love to talk to you. And that's exactly what I do in my 90 day private coaching program. We're going to go deep. We create the plan, we implement together, and we make sure your business is no longer dependent on you.
and that it's positioned to find the right kind of buyer on your terms. So here's what this looks like. You and I working together, one-on-one, we set a clear 90 day roadmap to de-risk your deal.
You're going to get support with systems, the team structure, the recurring revenue models, the financial prep and handover planning.
and full accountability to make it happen. This isn't just theory stuff. This is stuff that I've done for the last 25 years. This isn't a course. This isn't group coaching. This is real focused, hand on help for founders who are serious about building a sellable, valuable and owner independent business. So if that sounds like you, just go to sanpenny.com forward slash strategy.
If you're watching this live, you'll see a button down the bottom that says 30 minutes strategy call. that again, sanpenny.com forward slash strategy. You can book a quick discovery call. It's no pressure. I just want to have a conversation. want to see firstly, if we're a fit, because here's the truth. It's not about working harder. It's about working on what buyers value. You've already done the hard yards building your business. Now it's time.
to make sure you get rewarded for it. So let's remove the risks. Let's get positioned and let's make buyers say yes. So if you're sitting here thinking, yeah, Sam, this all makes sense, but I don't know where to start. I'll tell you what, you're not alone. I've worked with founders at every stage of the journey and here's the reality. Most business owners
are way too close to the business to actually see where the real value lies or even where it's leaking. And that's where I come in. If you want someone who's done this, built and sold businesses, navigated due diligence and helped others drive their valuation up, let's have a chat. If you're watching this live, there's a QR code on the screen. Otherwise, remember, sanpenny.com forward slash strategy. I run a high performance coaching program.
specifically for founders who want to exit a higher multiple. They want to reduce the chaos and dependence on them. They want to build a business that buyers actually want to buy. You're not going to get feel good talk from me. It's not going to be theory. It's going to be 100 % execution. You and I are going to roll our sleeves up. We're going to identify the levers and we're going to implement fast.
So if you're ready to turn your business into highly valuable, sale ready asset, remember head to sanpenny.com and let's have a chat. We're gonna map it out, what it could look like for your business. All right, now let's open it up.
it's over to you. We've talked through the five biggest ways to de-risk your business. So I want to hear where you're at. So let me ask you this. What's the biggest risk in your business right now? If you're the buyer, what would make you hesitate?
Is everything still running through you? And are your financials clean and clear? Do you have documented systems or is it still in your head?
And seriously, what would a buyer question, maybe it's, I don't know, customer concentration, maybe it's staff dependency. Maybe you've never actually mapped out what a handover would look like.
I know that we've covered a huge amount today, so this is your chance to pressure test what we've covered. You don't have to be perfect, but you do have to be aware.
All right, so there we have it. Hope you enjoyed that session. We covered a huge amount in that today. Remember, risk equals a lower multiple. So continue building a great business, build strong and build bold. I'm Sam Penny.
I'll see you on the 17th. Bye.