Over the previous few months, I’ve obtained a stunning variety of emails and even telephone calls from personal fairness corporations asking if I might take into account promoting my enterprise.

“Gene,” all of them say, “we have adopted your development within the know-how house and imagine we will help you unlock worth whereas preserving your legacy and group. Would you be open to a 20-minute name to debate mutual alternatives?”

It is flattering, positive. And it is sensible. In accordance with Harvard’s Company Governance website, personal fairness exits jumped from $754 billion in 2023 to $902 billion in 2024 — a few 20% improve. Different studies present deal worth rising by 50% within the first half of 2024 alone, with strategic acquisitions main the best way.

Non-public fairness is all over the place — scooping up contractors, producers, distributors and sure, even tech firms like mine.

Why? As a result of many enterprise house owners are ageing out. The typical small enterprise proprietor within the U.S. is over 55, in response to the Small Enterprise Administration — and that was again in 2020. So a wave of exits is underway, and buyers are keen to purchase companies with sturdy financials, recurring income and development potential.

However my enterprise? I do not suppose I am sellable. Not as a result of I would not entertain a proposal — however as a result of as soon as a purchaser appears to be like below the hood, they will understand the uncomfortable reality: My firm has no actual worth.

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The steadiness sheet nobody needs

Let’s begin with the fundamentals. My enterprise has no onerous belongings. No buildings, no gear, no bodily property. Only a bit of money and accounts receivable.

Certain, we even have only a few liabilities. In actual fact, most of our “payables” are literally pay as you go shopper deposits — blocks of time that clients buy upfront. It is an effective way to spice up money move and cut back danger, but it surely creates a legal responsibility a purchaser would wish to honor. Not precisely engaging.

No contracts, no ensures

We do not lock shoppers into long-term contracts. We have by no means offered upkeep agreements or recurring help plans. Our shoppers use us after they want us — and go away after they do not.

There isn’t any proprietary course of or secret sauce. What we do is not sophisticated. In actual fact, anybody may be taught it on-line. Our shoppers rent us not as a result of we’re distinctive, however as a result of they do not have the bandwidth to do it themselves.

So if a non-public fairness agency have been to guage my firm, they’d shortly understand there isn’t any predictable income stream to base a valuation on. No recurring earnings. No clear a number of to use. We go venture to venture, shopper to shopper.

That may work for me. But it surely would not work for them.

A group that disappears once I do

I do have staff. However many of the work is dealt with by unbiased contractors. That comes with its personal danger — from employee classification points to an absence of long-term dedication.

Our setup has all the time been digital. We have been distant since 2005. No workplace. No shared tradition. No in-person conferences. Everybody works independently, and I examine in as wanted. It really works for us — but it surely would not scream “scalable group.”

The fact? This enterprise would not run with out me. I do the promoting. I do the advertising and marketing. I oversee initiatives, deal with accounting, handle admin and lead the day-to-day. If I have been hit by a bus tomorrow, this enterprise would fold inside 30 days — with contractors and employees doubtless splintering off to do their very own factor.

No IP, no exclusivity, no moat

We implement CRM platforms. It is a crowded, aggressive house. The very distributors we symbolize are sometimes our largest opponents. There isn’t any barrier to entry. Opponents seem usually — normally cheaper, typically youthful and generally higher.

We have no mental property, documented methods or outlined processes. Each venture is completely different, and it not often is sensible to create templates or workflows that will not apply subsequent time.

So there’s nothing right here to “purchase.” No belongings. No exclusivity. No edge.

So, what do I’ve?

I’ve a enterprise that works for me.

For greater than 25 years, it is paid the payments, put my children by means of faculty and constructed a retirement plan for my spouse and me. It is also supported dozens of staff and contractors alongside the best way. That is one thing I am pleased with.

My mannequin has all the time been easy: do the work, invoice for it, generate money, save what you’ll be able to. Rinse and repeat. And for me, it is labored fantastically.

However let’s be trustworthy: this mannequin would not construct transferable worth. There isn’t any goodwill. No buyer-ready methods. No model fairness. No enterprise worth. Only a extremely useful, one-person-driven operation that disappears with out me.

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If your small business appears to be like like mine

Do not be discouraged. However do be lifelike.

You could be producing money — and that is nice. You could be dwelling effectively — even higher. However until you’ve got deliberately constructed for scale, construction and succession, your small business is probably not price a lot to anybody else.

And that is okay — so long as that is the plan.

For me, it’s.