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What are you doing it all for?

Whenever we come across fencing installers who want to sell their business – usually because they want to retire and they have no children willing to take it over – we hear that they are finding it extremely difficult to find a buyer. In most cases, it turns into a clearance sale. The vehicles go to a Romanian export trader. The machinery and tools end up with another fencing installer in the area. If you're lucky, they'll also want to have the customer base but that almost always brings in less than expected, because all those addresses are also in Yellow Pages and the customers will automatically end up with fencing installers in the area anyway, if the current fencing installer ceases business. The only thing of real value is usually the buildings. If these have been paid off, they can be leased or sold and the fencing installer will have enough money for his retirement.

But in virtually every case, the business itself is lost. The business for which they worked all their lives and strained every muscle, the business for which sacrifice after sacrifice was accepted even though it deprived their own family of much time and attention – that business simply ceases to exist overnight. The sign is taken off the front, the name disappears from Yellow Pages, and that's that.

In itself that's not such a big deal if you're a fencing installer purely and simply because you really enjoy the job and love putting fences in the ground. In that case you've had an enjoyable profession all your life that you can look back on with pleasure during your retirement.

But if you put in long days all your life because you wanted to build a great business that would provide employment for decades to come and that would keep your name alive even after your death, then it's rather a shame. And if you did it because you hoped that one day it would generate enough money for a villa in Ibiza, with a fridge full of champagne and a swimming pool full of girls in bikinis (or sun-tanned pool boys, for the female fencing installers), then you're in for a nasty shock when suddenly it appears that no one wants your business.

If you don't have a successor to whom you can transfer the business little by little, then for selling your business you are dependent on other fencing installers or investors. If you want them to pay a fat price for your business, there are two incredibly important things that most fencers either fail to do or do too late.

The first one is that you need to ensure your trade name has value. This name can produce more than the buildings and the fixtures and fittings combined. A good name radiates confidence. Customers also prefer to buy their new car from the official dealer rather than at the bazaar. This is because it employs professionals and also because it has a big name at the front. This name reassures you that you'll get better service there than at the unbranded dealer on the street corner. And if you do pay over the odds, at the dealership it won't be by as much.

The same goes for fencing customers: the bigger your reputation in the region, the more they’ll pay to buy a fence from you. But it can work the other way round too. If you aren't well-known and are just one out of many fencing installers in Yellow Pages, customers will look at the price only. If you're half a euro dearer, they'll go to someone else. Investors know that as well. The bigger your name, the more interesting is your business.

A pleasant side effect is that – even while the company is still yours – you earn more. And this gives you money to hire more salespeople and erectors, allowing you to keep growing and earn even more.

Establishing a reputation is often easier than you might think. You don't need the same brand awareness as Coca Cola to be of interest to investors. All you have to do is show that customers in your region think of your company when they need a fence. A lot of fencing installers have managed to get there, so it is possible. Even if you don't know much about marketing.

Fixing a nameplate to every fence you install is a first, easy and very effective method. Some fencing installers are hesitant to do this. They think the customer will think it ugly, or regard it as too boastful. But if you get over your diffidence and modesty and hang a nameplate on every fence, you will really benefit from this. Hang it on uprights every 25 metres and hang it on every corner and next to every gate. Make sure your name is big enough for it to be read from the street. You'll be amazed how quickly customers will say that they came to you because they saw a sign on a fence.

A second, relatively easy method is to sponsor the regional sports association. If it needs a fence, offer it one for the price of the materials, provided it lets you hang banners there. Or, if your cash flow allows, provide the fence completely free of charge in exchange for more and bigger banners. The more eye-catching the banners, the better.

The second point you need to have in place to be interesting to investors is more difficult: your company has to be able to operate without you. And then preferably operate in such a way that it continues to grow a bit year by year. In a lot of fencing companies, the owner is the driving force. He does all the important things himself and is constantly motivating his staff for all other tasks. That's a major pitfall as it means your business collapses if you're no longer there.

If you're (still) small – with one team out on the road and one employee in the office at most, it's almost impossible to make yourself redundant. Then the first priority is to grow bigger. But once you have three or four teams on the road, plus an extra salesman driving around and an extra buyer and planner in the office, then it's time to gradually shift more of your own work to them. You can then devote the free time it gives you to training and making your people more efficient, or looking for even more people to help.

Of course, this second point is easier said than done. And it can't be done in a week either. But it's something you will have to work on a bit every day between now and the date when you want to retire, assuming you want to sell your business for a decent price by then. Because if you wait until you're 65, it'll be too late.

Even if you already have a successor, the latter point still applies. Whether it's one of your own children or a loyal employee: start thinking in good time about how you'll transfer the business. Because that will involve all manner of things. From a legal perspective and more especially from a taxation perspective also. No matter what country your business is located in, the tax man is always at the head of the queue to cream off as much of the sale's proceeds as possible.

If you manage to get a good price for your business that allows you to retire to a Caribbean island, feel free to send us your new address: we'll send the Fencing Times on request to any country with postal services. <


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