Today we wrap up our blog series on exits with a review of a new book released at the end of last month, Exit Rich by Michelle Seiler Tucker and Sharon Lecter. While this book is not written specifically for ecommerce businesses, it is packed full of great information. Ms. Tucker draws from her vast experience in the mergers and acquisitions industry. Ms. Lecter adds mentoring notes based on her CPA expertise, entrepreneurial ventures and her financial acumen that she has shared, beginning with co-authoring Rich Dad Poor Dad, and many other titles.
Exit Rich – Part 1
In the first part of their book, Tucker and Lecter outline their ST 6 P Method to help business owners begin to prepare to sell years in advance of their target sell date. With this method, they recommend that you assess your business for the following: People, Product, Process, Proprietary, Patrons, and Profits. They caution, “The one P that buyers will not pay for is potential. Many owners with struggling businesses say their company has potential. While buyers want a company with growth potential, they’re not going to pay a premium for it, because they’ll have to invest the time and money to possibly realize it.” Much of this chapter and the resources they direct you to on the website help you assess your business and get into a “Seller’s Mindset.”
Exit Rich – Part 2
This portion of the book dives deep into the ST 6 P Method by discussing each “P” in detail. By completing the assessments in each chapter, you will better understand your business’ current strengths or opportunities to improve. In addition, the authors provide actionable recommendations to help you make each area of your business strong and more valuable to a potential buyer.
Exit Rich – Part 3
This next section is dedicated to “Selling Your Business,” beginning with a chapter on Normalizing Your Financials. Here, Tucker and Lecter truly speak my language as they discuss the importance of financial recordkeeping and good books.
“One of the biggest problems with keeping sloppy books and records is tracking the owner’s expenses and other extraneous and one-time expenses. Business owners typically have amnesia when it comes to remembering what they are running through their company. We work with our clients to identify all nonbusiness expenses. We do not add back personal and nonrecurring expenses if the seller can’t prove the add-backs to us. Therefore, buyers and their teams will need to go through all of the expenses during due diligence to prove the legitimacy of each add-back. This can get painful when the seller reveals, line item by line item, what they’ve bought and how much they’ve funneled through the company. If your business doesn’t show a healthy profit on its tax returns, it’s almost impossible to sell the business without going through this exercise—all because you’ve been running personal expenses through the company and using cash to pay bills.”
At bookskeep, we do Amazon bookkeeping work with several of our clients that are considering selling in the future to present special financials statements that will separate out “add-backs.” By tracking their expenses this way from the beginning, we are able to present the possible value of their business based on their financials each month, based on the multiples they anticipate from their future business sale.
In addition to the financial chapter, the authors cover every aspect of the selling process. From determining your valuation, packaging the business, confidentiality, close and many more topics.
Exit Rich – An Important Read for Ecommerce Sellers
I highly recommend this book for those ready to exit or for those wanting to ensure the maximum value when that sale day does come along. The advice is good business management, even if selling is not in the forefront of your mind at the moment. Please let me know what you think when you read it. If you have specific questions, we can dive in and learn together.
Interested in Profit First?
If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you!
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all our ecommerce accounting and profit advising services here!
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