Leave on a high note

Troy Tappenden, the founder and former owner of Dream Doors, provides a rare insight into an established franchisor’s exit strategy.

At some time, almost every entrepreneur, business owner or franchisor will consider cashing out. And when you do, you’ll definitely want to get the best price you can. After all, you’ll only sell your business once, so getting the maximum return for all of your efforts has to be your priority.

So, how do you go about working out how and when to sell your business? It was a question that I pondered for more than five years before I sold my company. Dream Doors, in the spring of 2019. It took a while to find the answers, and I’ll admit I took a few wrong turns along the way. Nothing devastating, of course, but definitely costly – pitfalls I could have avoided with the benefit of hindsight.

If you’ve been a franchisor for a while, you’ll know there are plenty of people out there who will offer you advice and guidance – for a fee. And there are several who will say they can help you sell your business – again, for a fee. I’ve probably met most of them, and discounted several, after being let down by empty promises and false hopes.

So, having sold Dream Doors, I decided to help other franchisors plan and execute their exit strategies, and avoid the costly mistakes that I made. I’ve built up some fantastic contacts in the private equity arena who are looking for exciting investment opportunities in the franchise world. And for the right business, I might even consider buying in myself. I’m not ready to retire just yet!

So what are the key things I’ve learnt over the last few years? The first is to make sure your company isn’t all about you. That’s something I realised a long time ago – that to build a successful franchise you need to bring in the best people to work alongside you. It’s important to drop the ego and listen to those you empower, too, especially in areas where you are not or are no longer the expert, which, for me, was digital marketing and technical training. Timing is absolutely paramount as well. There really is no time to waste. If you want to exit your business and realise the best return for all of your efforts, you need to start planning for it now. And that means getting your house in order.

Make sure that if a willing buyer approached you tomorrow, you could show them your business in the best light. That means having the best infrastructure, most up-to-date systems, transparent accounts and, more than anything, proof that the business isn’t all about you.

Most of you probably know that a business doesn’t sell overnight. There’s a huge amount of due diligence that goes into buying and selling a business. Having the information to hand, and in a digestible format, will make things so much easier for the buyer and their team.

What would I have done differently if I could turn back the clock? For a start, I would have chosen different advisers in the earlier years. I would have been more careful in my recruitment strategies to begin with, too. We fixed that pretty quickly, as I soon learnt that recruiting the right franchisees. providing them with the best training and support, and helping them to flourish was key to building a strong brand. It’s the right thing to do from an ethical perspective, of course. But take that as a given. It’s also commercially the right thing to do, because a buyer Is interested in the success of your network since that is the revenue they are buying into.

Whether you’re thinking of selling now or struggling with succession planning, there are clear strategies to follow. It took me a while to find them, but I’m ready to share my experiences now. Get this right, and when you exit the business you’ll achieve the optimum value for it – just like I did.