One of the best things about owning your own business is that someday you may be able to sell it for a major payday. Selling your business (also called taking an “exit opportunity”) can help fund your retirement, or simply allow you to start a new business or career. Unfortunately, consulting exit opportunities are often the hardest to come by, particularly for solo practitioners.
The good news is that large consulting exit opportunities do happen. I should know because I have successfully sold two of my consulting businesses in the past. But there’s a trick to building your consulting exit opportunities into the kind of payday you’re hoping for. In this article, I’m going to tell you how to put yourself in to the best position to sell your business for big dollars down the road.
Why Consulting Exit Opportunities Can Be Hard
In most industries, if your business is turning a profit, it’s easy to sell. Whether you own a restaurant, a car dealership, or a manufacturing company, if you’re making money there’s someone who wants to buy your business.
Consulting exit opportunities are different, particularly for small consulting companies and solo practices. The smaller the consulting company, the more likely it is to rely on the reputation and skills of the owner.
If you own a company that employs 200 consultants, you may be able to convince buyers that the company can still turn the same profit without you. But if you’re running a solo practice, or you own a company that only employs 3 other consultants in addition to you… it’s going to be very hard to argue that the company can run just as profitably without you.
In fact, in order to sell a consultancy where you are the only employee, you’ll likely have to sign a contract to stay on for 3-5 years working for the new owner… and even then you will probably get less than top dollar in return for your business.
Thankfully, there is a better way…
The Secret Sauce for the Biggest Consulting Exit Opportunities
I’ve had two consulting exit opportunities in my career, and both of them were very profitable. In both cases, I was one of only 2 or 3 employees in the business. Actually, both times I was the only full-time employee in the business, which also utilized part-time virtual assistants to handle customer services and clerical work.
And, best of all, I didn’t need to sign long-term contracts to continue working in the business. One of the times, I didn’t stay on at all… I just signed the contract and that was that. The other time, I stayed on board for 3 months to help ensure a smooth transition. That’s an exit opportunity that most consultants can only dream of.
So how did I have two successful consulting exit opportunities even though I was the only full-time consultant working in the business?
The secret sauce was turning my consulting knowledge into information products that I could sell on my website and at my speaking opportunities, alongside my consulting services.
E-Books, Webinars, Classes, and More
Both of the times I sold my consulting businesses, I had spent the previous years turning what I knew (and what I was teaching my clients) into passive income products I could sell. These included e-books, webinars, classes, and membership programs.
At both of the companies I sold, the information products started as a second income stream, which was far eclipsed by my consulting income. And, at both of these companies, this info-product revenue stream eventually surpassed my consulting revenue by a wide margin. It was the passive income from these e-books, webinars, and classes that allowed me to have major consulting exit opportunities in both cases.
As an expert in your field, information products (also called passive income products) are easy to create. You’re simply taking what you’re already doing for your clients and teaching others to do the same. Best of all, those information products allow you to stop trading time for money… you can create an e-book or webinar once and sell it hundreds of times, without needing to put in any additional work.
Why Passive Income Products = Better Consulting Exit Opportunities
Remember what I said earlier… the biggest reason why it’s hard to sell a consulting business when you’re the only employee (or one of the only employees) is because buyers worry that they won’t be able to keep attracting clients once you’re gone. If the business is built around you and your knowledge, then once you leave, so will your clients
Passive income products solve this problem. When you create e-books, webinars, and online classes and sell them on your website, buyers know that even when you’re gone, they’ll be able to continue selling your information products to your website’s visitors (and to your e-mail list). They also know that they can bring in (hire) new subject matter experts to create additional info-products for them and continue selling them on your site and in your e-newsletter.
This is the reason why I was able to have two amazing consulting exit opportunities during my career, and am well on my way to a third… because I took what I knew and created information products that could be sold 24 hours a day, 7 days a week right from my website.
You Have to Start Early!
Here’s the thing about consulting exit opportunities: you have to start early if you want to have a big success. If you are running a consulting business, NOW is the time to start creating e-books, webinars, and classes. If you start one month before you put your business up for sale, buyers won’t value your passive income opportunities because you haven’t built up a track record.
Remember, when it comes to consulting exit opportunities, what matters is a track record of sales. If you have a strong and verifiable record of information product sales that reaches back two or three years, a buyer may be willing to pay anywhere from 25-45 times your monthly net profit (for passive income sales) in return for your business, and perhaps even add in a percentage of your consulting sales as well. Those are the types of consulting exit opportunities that every consultant dreams of!
Photo Credit: Bernard Hermant on Unsplash
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