Your team is part of the deal

Read time: 3 mins

Hey there!

Here’s a stat that should get any business owner’s attention.

Key person risk can affect a business valuation by up to 25%.

What is key person risk?

It’s the risk that too much of the business depends on one person.

Often, that person is you, the owner.

And if a buyer sees too much dependency on you, they’ll start to look at the business differently.

A strong owner can be a huge asset while you’re running the business.

But during a sale, the question becomes: what happens when you step back?

If the answer is that clients may leave, sales may slow down, decisions may stall, or the team may struggle without the owner in the middle of everything, that can affect confidence.

And when confidence drops, value can too.

Which makes sense.

If you were buying a business and found out the owner personally held the biggest client relationships, drove most of the sales, solved the tricky problems, approved every important decision and kept the “how this place actually works” knowledge in their head, you’d probably want to look very carefully at what you were really buying.

That’s why your team matters so much when you’re getting sale-ready.

A strong team helps show a future buyer that the business can keep working, growing and delivering value after you step back.

That’s what we’re looking at in this instalment of our Sale-Ready series.

We’ve already talked about knowing what the sale needs to do for you, aligning owners on the exit, and making sure your numbers support the story you’re telling.

This week, we’re looking at your people.

Because when it comes time to sell, the strength of your team can be a big part of what makes the business feel valuable, transferable and worth buying.

Let’s dive in!

How to make your team part of your sale value

1. More business, less owner

In a lot of small businesses, the owner is still the operating system.

You might have a team, systems and processes, but when something tricky happens, everyone still looks to you.

A client wants a special arrangement.

A quote doesn’t fit the normal model.

A staff issue needs a careful conversation.

A supplier problem needs sorting quickly.

A long-standing customer expects things to be handled “the usual way,” which is somehow both very specific and written down nowhere.

This is normal.

It’s also exactly the kind of thing that makes a business harder to transfer.

A buyer won’t expect the owner to be irrelevant. They’ll understand that you’ve built the business and that you carry a lot of knowledge. What they’ll want to see is that the knowledge, relationships and decision-making are starting to live inside the business itself.

So document the things that matter.

Let other people own parts of the client relationship.

Train the team to handle more decisions.

Build routines that don’t rely on you remembering every detail.

Over time, more of the value starts to sit in the business itself.

That’s what makes it easier for a buyer to believe the business can keep working when you eventually step back.ue.

2. Build capability where it adds the most value

Once you’ve reduced the obvious owner reliance, the next question is where stronger team capability would add the most value.

Every business has a few areas that really drive performance.

It might be sales.

It might be client delivery.

It might be technical expertise, operations, account management, project management, or leadership within a key team.

Those are the areas a buyer will look at closely, because they’re buying the future performance of the business, not just what it has done in the past.

So this is where capability really matters.

For example, if your business relies on a specialist delivery team, a buyer will want confidence that the quality doesn’t depend on one standout person. Strong processes, training, quality checks and a second layer of capability can make that team feel much more robust.

If sales is a major driver of value, it helps to show that there’s a clear sales process, decent pipeline visibility, trained people who can sell well, and a repeatable way to bring new clients in.

If growth depends on hiring more people, the buyer will want to know new hires can be trained properly, supported quickly, and brought up to standard without everything falling apart for three months.

This is how team capability becomes part of the value.

You’re showing that the parts of the business that matter most are strong, repeatable and able to keep improving.

That gives a buyer more confidence in what they’re buying.

And it gives you a better business to run now.

3. Use the barbecue test

Profit is one of the biggest drivers of value, but buyers don’t only care about whether the business made money last Think about the new owner of your business, six months after the sale.

They’re at a barbecue, someone asks how the transition went, and they say:

“Honestly, it was excellent. They made it so easy. We knew who mattered, how the business worked, what clients cared about, and where to pay attention. There were no nasty surprises.”

Pretty great review.

Now work backwards from that.

A good handover means the buyer doesn’t have to slowly discover the things you already know.

They don’t have to find out three months in that Sarah is the person everyone goes to when delivery gets messy.

They don’t have to work out that one major client gets nervous every December because of what happened years ago.

They don’t have to guess which processes are actually used, which team members are critical, or which parts of the business need close attention early.

That kind of clarity should already be built into the business.

It should be in the way the team works, the way clients are managed, the way processes are used, and the way decisions get made when you’re not in the room.

So if you want to make your business more sale-ready, think about what would make a future owner say:

“They made this really easy.”

Then start building those pieces now.

⭐ Bottom line

The more that sits only with you, the more fragile the business can look to a buyer.

But when your team holds more of the knowledge, owns more of the relationships, and has strong capability in the areas that matter most, the business becomes easier to trust.

And this work helps you now too.

A stronger team makes the business easier to run, easier to grow and easier to step back from.

So if you want to be sale-ready one day, start building that team now.

It’s one of the best ways to build a stronger, more valuable business that doesn’t need you in the middle of everything.

Sounds like a pretty great spot to be in, right?

Speak soon,

Lynne & Steve

P.S.

Next week, we’re looking at what would make a buyer nervous. Get ready for a ‘skeletons in the closet’ newsletter.

Boo!

 

 

TLDR

• Your team is part of the deal.
• If too much of the business depends on you, a buyer may see risk, and risk can affect value.
• To get sale-ready, focus on:
  • moving the business out of the owner
  • building capability where it adds the most value
  • using the barbecue test to plan a smoother handover
• A stronger team helps you run the business better now, and makes the business more attractive when the time comes to sell.

And if you want help with this, check out our Business Consulting services page, or get in touch with us here.

 

P.P.S.

Know someone who’d get value from this? Feel free to forward it on, it might be exactly what they need to hear right now. 😉