Investing in your business now could be the best succession plan you ever make, says Chris Cook of Profile Ltd.
Is your business a cash cow or a saleable asset? That’s a vital question to ask yourself early on in your business, according to Chris Cook, founder and 50 percent owner of corporate uniform manufacturer Profile Ltd, which sold to Ezi-Buy in 2006.
When Profile was founded 17 years ago, Cook and his business partner decided their business wasn’t going to be a vehicle to dodge tax or subsidise their lifestyles. Instead, “from day one we thought of ourselves as employees of the company.”
Sounds like hard work, but it was done with a long-term view in mind. “For every dollar you save yourself personally by charging to your business, you’re actually losing four times that multiple on the saleable value of your business,” says Cook.
Early on, the Profile team knew they had a successful business on their hands. “Because it’s a very well-founded company with blue chip clients and secure long-term contracts supported by cutting-edge design, it put us in a position to value our brand accordingly,” says Cook.
He says no business is too small to understand corporatisation and best business practice. “Everything you do year-on-year has an impact on the valuation of your business,” he says.
When the time came to sell, the challenge was finding the right buyer. “We didn’t want to sell to the first available buyer. We needed to ensure we were in the best position to realise maximum potential value.”
Some key drivers to maximising Profile’s value were rigorously planned and designed systems, and good financials. “Auditors commented our books were some of the best they’d ever seen. They said the same about our inventory and systems.”
Now Cook is an executive director with Ezi-Buy, and thoroughly enjoying it. “We had several parties interested, but strategically we were thrilled with Ezi-Buy,” he says. “When you look at your business as a saleable entity, develop the right systems, get good external advice and have a solid exit strategy, you tend to make the right decisions for the business.”