It was my wife’s birthday yesterday. She’d kill me if I told you how old she turned but suffice it to say, it was a biggie (there is a zero on the end).

In an effort to preempt melancholy, I made my wife her favourite breakfast of all time: an egg McMuffin complete with a happy face made of HP sauce:

Kicking off a milestone birthday right

Finding English Muffins in this part of France is no easy task but I was determined to get this milestone birthday off to a good start. Which got me thinking, about milestones. Why is it that we celebrate birthdays or the start of a new year? On paper, it’s just another day, right? But milestones give us an excuse to hit the pause button and remind us of what we have accomplished, all the things we have to be grateful for and gives us permission to dream a little about the future.

So what are the milestones that you’re celebrating on your journey to building a valuable, sellable company?

If I may, here are a couple I think you should consider commemorating.

1. The day you go “all in”

Most of us start businesses while doing something else. You plan your business, maybe make a couple of sales but, as long as you have a job or a few credits left to get, you’re still on the fence. Then one day you decide to quit everything else and commit 100% to getting your business off the ground. Now that’s a day worth celebrating –  not for what you have accomplished, but for the courage it takes to jump off the fence and the adventure that lies ahead.

2. First time someone (or something) makes a sale

Making a sale as a business owner is a bitter sweet feeling. The sense of triumph is tainted by the realization that your business is dependent on you showing up. But the day that your salesperson walks into your office with a signed contract or someone hits the “buy” button on your website without you having to nudge them is a glorious moment in time.

3. A New home for your company

There is something special about moving into new space. A lot of business owners are creative souls at their core and a new environment to work in usually means you’re growing and investing in the future. Definitely a time to throw a party.

4. The million dollar mark

Hitting a million dollars in revenue is a significant achievement. Of the 27 million businesses in the United States, roughly 3%  do more than a million dollars in sales. You’re in an elite group – celebrate.

5. The first shot over the bow from an acquirer

The first time someone approaches you about buying your business is a special milestone. It’s usually an informal advance, maybe over lunch or at a trade show. I remember the first time I was approached by a big company who wanted to buy my marketing agency. The partner in charge of business development asked me to lunch and, once the plates had been cleared,  asked me if I would ever consider selling my company. I asked him what he was offering and he made a vague reference to “ten times”. I thought ten times was a very generous offer for a service business until he revealed he was referring to ten times net income after tax and that most of it would be made available on a five year earn out. While I passed on the offer, a little part of me was flattered to have been approached.

6. One million dollars of EBITDA

While you don’t need to have a million dollars of pre tax profit to sell your business, it is an important milestone to shoot for because it opens the door to a wider range of buyers. Some strategic acquirers won’t consider a business will less than a million dollars of Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA). Also, financial buyers (e.g. private equity companies) have started to come “down market” and some will now consider businesses with a million dollars in EBITDA. You may not want to sell to a financial buyer, but having another offer at the table creates competition for your business.

7. First management team meeting

Cobbling together a senior team is a slow process but eventually you realize that your business is no longer all in your head and that other people have (and want) a say in things. Sitting down with your management team for the first time is a moment to savour – you’ve built a business capable of attracting senior talent and you have taken a giant step towards being sellable.

8. LOI / term sheet / Expression of Interest

Another big milestone is the first time you get a written offer to buy your business. More than empty chatter over lunch, this is a formal document where someone validates – in writing – that your life’s work has value to someone other than you. There’s still a long road ahead before closing day, but you deserve to celebrate.

9. Closing day

You need to down an entire bottle of your favourite bubbly for surviving the due diligence period which is a little bit like how I imagine a stoning to feel.

10. Your last day

In my last company, I remember the final day like it was yesterday. I had ridden my bike to work so when it was time to go, I put on my biking clothes, said my goodbyes, and road off down the street. The spring air has never felt so fresh, my bike had never felt so light. Freedom is a feeling to behold.

Out of interest, what milestones are you celebrating?

DONE DEAL

By Nick Whitmore

Ed’s payment-processing company in the tri-state area was producing revenue of $1.86 million when he was asked to join the $50-million family business. Ed had a decision to make: keep growing his small business or join the much larger family empire. In the end, a sense of obligation to the family business tipped the scales, and Ed decided to put his business on the market.

“Initially, he did not want to sell, but his family really needed him in their expanding business, and Ed wanted to answer the call,” explains Sonny Soi, Ed’s business broker and the president of CrossPoint Business Group.

>> More

As you know, I’m a big believer in recurring revenue as a way to make your business more sellable. Recently however, I got an interesting email from a reader who asked me about the pitfalls of switching to a subscription-type model:

John: I was led to your website and comments while searching for information on the business pitfalls of converting to the subscription model. The benefits seem clear to me, but I need to do a better job of addressing the potential dangers and difficulties, before I take it to my management team (and Advisory Board) and win their buy-in. If you’re willing or interested, is there a way that you can help with that? >> More

I got an email yesterday from a friend who is looking for someone to help him sell his business.  I have found intermediaries (mergers and acquisitions professionals or business brokers) to be a valuable resource for selling a business (and preparing it to be sold). In the video above, I share my experience with how to find an intermediary to represent you and what you’ll need to pay them to help you sell your company. Please use the comments section of this blog to share your own experience with finding and working with a business broker or M&A pro.

On a separate note, I found out this morning that my book Built To Sell has been recognized by Inc. Magazine as one of the top business books of 2010. I’m still peeling myself off the ceiling. A great big THANK YOU to you for reading the book (and this blog) which I know helped the editors at Inc. make their choices.

Finally, here are some new articles for this week about selling your business:

Three tips for negotiating your earn-out

~ published November 30, 2010

The other day I met with two entrepreneurs running a $1-million per year graphic design business. They were in the final stages of negotiating a deal to sell their company to a large multinational marketing services firm. »more

The mercenary vs. the missionary entrepreneur

~ published December 1, 2010 Globe and Mail

Do you have a purpose in your business that goes beyond making money?

• Harley-Davidson’s mission is to “fulfill dreams through the experience of motorcycling.”

• Southwest Airlines is trying to “democratize air travel so that all Americans can visit a loved one or relative at a happy and sad time in their lives.” »more

How to get employees to care

~ published December 2, 2010 Globe and Mail

To build a valuable company you can walk away from – whether to sell or to leave just for a vacation – requires that you figure out how to get your employees to care as much as you do.

For his advice, I spoke to Ken Blanchard, whose books, including Raving Fans and The One Minute Manager, have sold millions of copies worldwide. »more

Ready to Sell Your Business? Avoid These 8 Mistakes

~ published December 2, 2010 BNET

Are you planning to step away from running your business in the next few years? Here are eight mistakes to avoid before hitting the eject button:

Mistake 1: Being boring

While it is true buyers like predictability, they also like growth. Set aside a small slice of money for experimenting on new things (product ideas, etc.). »more

Do you write a blog, speak at events, Tweet or publish a newsletter to position your company as a leader in your industry? Have you ever considered writing a book to add to your profile?

I wrote my first book back in 2002 to help get Warrillow & Co on the map. I sent prospects a book and they gave me a warmer reception. I’m pretty sure we would not have landed Apple or American Express as customers without my first book as a credibility booster. Having a book also helped with existing customers who paid more attention to what I had to say. Employees and new recruits were also impressed.

The downside of writing a book – or any sort of marketing where you’re the front person – is how closely it ties you to your business; which is what Chris Brogan, the co-author of Trust Agents, found. Trust Agents became a New York Times Bestseller last year and Brogan had offers from people who wanted to buy his digital marketing agency, New Marketing Labs, but all were contingent on him personally sticking around for an earn out. (Read my interview with Brogan to get his perspective on building a sellable company and the perils of being the spokesperson for your business).

This week I also got a call from a brand name author (you’d know his name if I told you) who is looking for some help to turn his business into something sellable. He has written a number of bestselling books, which helped him to create a thriving speaking, education and events business, but it is too dependent on him personally. We’ve agreed to a barter deal where he is going to help me as a newer author and I’m going to help him turn his business into something more sellable.

I think your decision to write a book comes down to one of timing. If you are planning to sell your company in the next 5 years, I think writing a book will tie you to your business too much and may do more harm than good. If your time horizon is longer for getting out, then a book can solidify your credibility, garner respect from prospects and customers and accelerate your growth. I wrote about picking a format for your business book this week.

Do you have a book in you?

(photo courtesy of Flickr/Horia Varlan)