When I decided to sell my studio - I googled 'How to sell your portrait business' and a LOT of articles came up on how to START a photography business- but nothing on how to exit. Turns out - selling in our industry isn't as common as other industries.
I'd been ticking along setting my studio up to be saleable for a few years, and recently - I did just that. I listed my studio for sale November 2020, and early March 2021 we had a buyer, went unconditional, and settled in mid-May with handover completed by the end of May. All up it was a relatively simple process with a great outcome.
So I thought I'd share what I did to sell, and how you can begin setting your business up for the future also.
Now you might be wondering why this is even important - after all - it's likely that you're still in the start-up mode, or in growth mode - and the thought of ever leaving your business might seem absurd at the moment.
But stick with me here ok?
At some point in the far away future, you might desire a change of direction, or to retire. You might even decide that after all those years of hard work, it would be better to leave and get PAID for leaving - than to simply close it all down. So why not start building an asset now?
And you might also find - that if you have a commercial lease, a team of people and a lot of clients on the books - that leaving isn't always so easy either - you might be locked into a lease timeframe, or may not want to make your team redundant - so maybe it's better to leave a legacy of sorts and pass your business to new hands.
You see - I never thought I'd sell as early as I did - I assumed that since I had a dream career I loved - that selling would be many many years away. All the same, I decided to start setting my business up for sale anyway as I knew that it would actually benefit me hugely while I was the owner - meaning that I had excellent systems and people in place to help me run things a lot smoother.
Then lockdown 2020 came along and I was given some time to really think about what I wanted from my life. While I had an awesome business, and a fabulous team - my heart wasn't really in it anymore. I was ready for a change and to follow my heart into business coaching - so I decided that I would put my studio on the market when things reopened. (Though I admit that I ALSO thought - 'who the hell's going to buy a business in the middle of a pandemic??")
I'd been working on setting my business up with systems for a few years, so I was pretty much ready to sell anyway. I contacted a broker, we went through all the details, created a marketing plan and by November it was on the market.
So if you think that one day you too might might want to sell - here are some top tips to focus on that will set up for a sales success one day in the future.
You know this is my jam right here - numbers, costs, profit, average sales - so selling or not - you NEED to know these, to track these, and to be sure that you are constantly on top of them. The first thing a broker and a buyer will look at is - how much money does the business make? (And by that I mean profit).
Start right now by getting to know your numbers - think of them like your friends and catch up with them as often as you can. Track average sales, promotion revenue, costs, overheads, profits etc. Can you increase your profit by increasing volume, increasing your average sale and decreasing your costs?
Be sure to have a good accountant who can prepare annual reports for you which are easy to show your financials to prospective buyers. Handy hint - using an accounting system such as Xero also makes everything SOOOO much easier too.
When you sell a business which is in excellent financial position - the buyers will come. I sold my studio at its PEAK! Literally - 6 weeks after finishing our best year ever, and 2 weeks after our best ever month! This is unusual as often businesses are being sold because they AREN'T good financially. By making sure that your studio is tracking strongly for growth, has a consistent and good profit - will mean that any potential buyer will take a LOT of notice.
Systems are the backbone of every successful company. With systems - things run smoother, tasks and projects are completed faster, training and growing a team is simpler and when systems are in place everything just runs a lot smoother. Anything that you do more than once in your business - can be recorded as a system. Start doing this now with 1-2 things a week - write a process for each task (handy hint - start with the tasks you'd like to hand over first) and then when you hire you wont spend all your time repeating the same things to the same questions.
Systems are great for you too - like when you go to do something that you haven't done in ages and you think "Now, how did I do that last time?" - simply go to your systems file and find the process to follow. Easy!
I even heard somewhere that systems can actually save at least 2 hours a DAY!!! Imagine - what could you do with an extra 10 hours a week??
How reliant is your business on YOU? Meaning - if you left or were sick etc - could the business keep running? Do your customers come to you because of YOU? Or for the service you offer?
If you are your business - here's the hard truth my friend - you may struggle to find a buyer and if you do - any sale will pretty much be for equipment only.
Now I get it - not every business owner wants to hire a team and I'll admit that yes, it can be the toughest thing to get right in your business,. However - if you want to build an ASSET that you can SELL - your team will be the greatest part of that. (Not only that - how good is it to take time off and still earn money? Trust me - its pretty darned awesome!)
Without a team - you really have a job. And selling a job is way harder than selling a business.
(Kind of on the same note - and something to consider here - is the name of your business. While your clients probably don't care if you are Jill Smith Photography - or Portraits on Smith St -a potential buyer might find that a personal branded studio is less desirable than a studio with a more commercial-sounding name. I used to be Kim Hamblin Photography - and rebranded to The Portrait Studio- a name that is so much more saleable and scalable)
4. Barrier to entry.
We all know how easy it is to buy a camera and say "I'm a photographer' right? In fact - back in the beginning - it's pretty much what I did too! So the barrier to entry in our industry is pretty low. However - and this is where I cycle back to my systems bit - the difference between a person with a camera and a highly profitable studio - will be the systems and people that are in place.
Having a low barrier to entry was also why my broker and I decided to market my studio as a BUSINESS - and not as a portrait studio. We wanted to aim at non-photographers who wanted a good business investment - not rely on the hope that a photographer might come along and invest in a ready-made studio.
5. Potential (and a plan) for growth.
Another key factor that a buyer's accountant and lawyer want to see - is potential for growth. Be sure that you can show them a solid plan for increasing profit as well as other opportunities that could be looked at. This gives them a lot more confidence to say to the buyer - "go ahead, it's a good buy." (And trust me - if the accountant and layer don't think it's good - the sale will not go through.)
6. Location, Premises and Lease.
Where your business is will be of much interest. Is it in your home? Or on a busy street-front? Is there good parking nearby? Where are your nearest competitors located? If leased - is the building in good condition? Is the lease renewable? How much time is left on the lease - anything less than a year could make a purchaser nervous. What are operational expenses?
7. Work with a broker - not a private sale.
When you work with a broker - everything is so much easier! A broker will help you prepare for the sale, will ensure you get the best price (remember - they get a commission and so it's in their best interests) and they will screen all potential buyers to ensure that they aren't 'tyre-kickers' or the local competition sussing out your business. Also - they often have a good database of buyers and they know what they are doing - I might be good at portrait sales, but I knew nothing about selling a business.
A broker will also be able to realistically value your business based on the factors mentioned above - a business priced too high won't sell and if you price it too low - you are missing out on receiving a fair payment for your all your years of hard work.
8. Prepare a handover plan.
When I handed over my studio - it was to someone who had never been a photographer or worked in the industry. I knew it would take a lot longer than a few weeks for them to learn everything as they had no point of reference. So I approached handover like I would employing a new team member - I drafted a week by week plan, gathered all the required resources, and created a training course for them to learn from and refer back to long after I'd left.
So start documenting your processes now - anything you do more than once record the steps so that one day when you hand over your business after a successful sale - you are also handing over a full manual on how to run to it.
So there you have it - my top tips for selling your business. Start putting the first 6 steps in place right now and so when it is time for steps 7 & 8 - you'll be set to go! And in the meantime - not only will you be creating an asset - but you'll be creating a business that works for YOU and not the other way around.
If you'd like to hear more about how I sold my business - check out this recent podcast on Photo Biz Exposed where Andrew Helmich and I went into great detail on what I did and what's involved in selling a portrait business.
Book - "Exit Rich - The 6 P method to sell your business for a huge profit" - I only discovered this book recently but I wish I'd read it before I sold! While I had an awesome outcome -there are definitely one or two things I could have done or prepared for better for sure. You can also check out this awesome podcast about the book here.
For my Kiwi friends - I sold my studio through Link Enterprise. It was the first portrait business they had ever sold (at the time of writing this, portrait businesses aren't sold very often in New Zealand - but hopefully this will soon change as photographers begin to think ahead and plan for their exit.)