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Guest Blog by: Emilee Gehling, Goosmann Law Firm
Before August 6, 2015, the nation’s first Treasury Secretary was rarely discussed outside of history buff circles. It was on that day, however, that Lin-Manuel Miranda’s Hamilton premiered and soon took the nation by storm. After taking home a record-breaking 16 Tony nominations and millions in ticket sales, the smash Broadway musical highlighting the life of Alexander Hamilton did more than entertain; it also provided lessons to business owners. Here, courtesy of Hamilton, are five lessons to help you overcome the odds to sell your business for top dollar.
Good things take time
It took producer, composer, and star Lin-Manuel Miranda six years to write Hamilton. Miranda wanted to ensure the musical was perfect before it came out and that he had cultivated the production to be of the most value it could be. When Miranda started working on Hamilton, he was just coming down from his incredibly successful production of In the Heights. Instead of using his momentum his previous show had produced, Miranda spent those six years researching, thinking, and writing. On writing, Miranda stated: “Anytime you write something, you go through so many phases. You go through the ‘I’m a Fraud’ phase. You go through the ‘I’ll Never Finish’ phase. And every once in a while you think, ‘What if I actually have created what I set out to create, and it’s received as such?’” Similarly, selling a business takes time. Curtis Kroeker, general manager for BizBuySell.com and BizQuest.com, recommends a minimum of two years of preparation before putting your business on the market. You should give yourself enough time to produce at least three years of accurate tax returns that are able to show your profitability. Gathering all relevant financials is not something that can happen overnight. In this time, you can prepare a multitude of other things in order to reach the best selling price. Ask whose services you would like to enlist to help you through the sales process: an accountant, an appraiser, an attorney? Evaluate your needs and research your options. Do not settle on the first team that shows up online. Take your time; it is worth it!
Go out on an upswing
At the end of the musical, the entire cast comes together to bring finality to Hamilton’s life. George Washington reminds the audience that their remembrance is out of their control. Eliza, Hamilton’s wife, bemoans to the audience how she will spend the next 50 years trying to restore her husband’s image and frets that she has not done enough. As she dies, Hamilton shows her all those who will care for and protect her legacy as she did for him. The ending of Hamilton provides a valuable lesson to business owners. Selling at the wrong time can damage your legacy and force a sour ending. Selling a business for top dollar can force you to do something uncomfortable: exit on a high note. It does not sound challenging, but one of the biggest reasons business owners receive low offers for their business is this: the best time for you to sell your business — when sales and profitability are at an all-time high — also happens to be the time when you are least likely to part with it. Yet buyers will only pay for what a business is worth. If you wait until your business is declining to sell it, you will not be in high demand. Like Hamilton, preserve your legacy by ending at the right time.
Not every musical is a success, just as not every business sale succeeds. Miranda’s Hamilton succeeded because it presented the Founding Fathers in a way audiences had never seen—hip-hop, high stakes, and compelling character portrayals. Miranda was passionate about his vision, and it paid off. Creativity and passion are just as important in marketing a business as they are in theatre. When selling your business, you need to show how your buyers will be deeply and positively affected by owning your business. Before putting your business on the market, evaluate how your business does against competitors. Hamilton was not the first hip-hop musical and it certainly will not be the last, but it had factors that made it distinguishable from every other musical that had previously made the endeavor. What does your business have that makes you unique and valuable? Develop and market this point.
When it comes to selling a business, there is perhaps nothing more important than fighting off risk and defusing bombs before they explode. Alexander Hamilton was engaged in a marital affair with a woman named Maria Reynolds. Hamilton, knowing that the truth is the only way out, publicly writes “The Reynolds Pamphlets” to confess to the affair, hoping to save his political legacy. The emotional scenes in Hamilton perfectly encapsulate someone who knew how to mitigate risk. As a business owner hoping to sell in the near future, you should begin assessing your risk factors. Know the trends that are affecting your industry and plan for disruptors. Honestly evaluate your financial records and clear up any red flags. Touch base with your customers to ensure that your relationships with them will be a selling point and not damaging. By minimizing risk, you will receive a higher offer on your business.
Decrease your business’ dependency on you
In Hamilton, Hamilton delivers impassioned lines about decreasing dependency on government, reiterated in his Federalist papers: “The powers delegated by the proposed Constitution to the federal government are few and defined.” Hamilton feared the American people’s dependency on federal government. Business owners can take note. If your business relies on your personal talent or expertise, you will not receive high bids when you choose to sell it. Ensure that your operations are managed by staff or technology systems. With less day-to-day dependency on the owner of the business, a higher selling price is reached. A company that relies fully on the departing owner will be worthless when the owner parts ways.
If you are looking to sell your business for top dollar, you face the same challenge Miranda did: branding yourself above competition. With these lessons, you will be on the fast track to high sales as well. Your business, too, will end on a high note.
For more information, contact the Goosmann Law Firm at (712) 226-4000 or email them through their website goosmannlaw.com.
You can also visit one of their four convenient locations in Sioux City, Iowa; Spencer, Iowa; Sioux Falls, South Dakota; and Dakota Dunes, South Dakota.