Do you dream of retiring by selling your pool or hot tub business in the future? It can happen, just as it has for thousands of other people, with proper planning. A big part of making this dream a reality is ensuring that the business can run without your involvement. One of the best ways to do this is by using business software.
Each month, Evosus helps businesses that are actively being sold — or have recently been sold — go live on software. While these businesses range widely in annual revenue (typically $2 million to $20 million), the message we hear from them is consistent: “Software helped us establish the value of our business, and ultimately sell it. It allowed us to demonstrate that our business has a proven business process.”
Viewing Your Business as an Investor Most investors focus on the cash flow a business can generate, then try to understand the risks. They’re typically not concerned about the specific products and services you provide. So, while you may be running a pool, hot tub or backyard business, if building wealth and retiring is your goal, your focus should be on building a business that is repeatable and predictable.
REPEATABLE Prospective customers hear about your business, inquire, make a purchase, get fulfillment and the transaction is captured in your financials. The more you can make this process simple and streamlined, the more successful you will be. That’s easy to say and difficult to do, especially when scheduling, inventory and purchase orders are involved. The complexity associated with specialty retail, service and construction businesses is the main reason you need software. It streamlines complex procedures, makes your day manageable and creates a process that you (or an investor) can repeat over and over.
PREDICTABLE Most people don’t like surprises. Investors despise them, mostly because they are associated with risk. A predictable business creates peace of mind. Here are a few examples of data-driven statements that would delight investors and build trust:
— “On an average Tuesday in the spring season you can expect 50 people entering the store or calling in.”
—“Mondays are the day we get the most orders from our e-commerce site, with an average order of $175.”
— “We’ve been able to reduce order fulfilment from 20 days down to 10 by working with multiple suppliers.”
Statements with data points are the difference between feelings and facts. Investors want facts, and your business software should provide the data you need through reporting. Now that you have the investor’s perspective in mind, you’re on the path to success.
Make Sure the Foundation is Strong Much like building a pool in someone’s backyard, or installing a fireplace insert in their home, the structure, frame and foundation of your business is the key to success. Beyond business registrations and insurance, these are some of the key elements we recommend.
RETAIL Pool, hot tub, swim spa and hearth
Real estate — low cost / high traffic locations
Primary internet — fiber-optic cable is best. Minimum 100MB download / 5MB upload.
Secondary internet — fiber, DSL or tethering via cellphone / jetpack
Access to local distributors
POS hardware — fast and dependable point-of-sale hardware with integrated payments, real-time inventory lookup and customer order history
SERVICE Pool and hot tub service and warranty work
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Dependable service vehicles — a few dents and dings are acceptable, as long as the vehicles work well and are well cared for.
Equipment — commercial grade tools available from local distributors.
Mobile devices — consider tablets and smartphones, but do not assume that any device will work. Your software provider should have a list of devices they support. Most mobile providers now have unlimited data plans available for a reasonable monthly cost.
Apps and software that are built for “offline first.” In other words, ask if your techs can capture job data — whether they’re out of cell coverage for a few hours, or the entire day — then sync data when they come back online.
BACK OFFICE Equipped for managers and owners
Personal computer or laptop — We’ve found that Lenovo laptops have the best features for the money.
Accessories — power strips are one of the best investments you can make to keep your technology investments safe.
Internet access — As noted in the retail section above, your primary internet will go down from time to time, so you’ll always need a backup ready to go.
Software that allows you to take calls from customers, provide customer service and process invoices, all while staying in touch with service personnel in the field.
Focus on the Needle Movers Again, with the goal of building wealth and retirement, you’ll want to focus your time and effort on the key functions that build value. Back office and operations are not included on that list. Overhead is the enemy, and in order to keep your costs low, your goal with back office functions should be simple and streamlined. The real action is in the following areas.
MARKETING Driving qualified customers from referrals and online reviews are the name of the game. Marketing fuels your business and can build value every day.
MARGIN MANAGEMENT Selling is easy. Selling the right things to the right people, at the right time is an art form. The most successful businesses know their profit margins, by product line and product. They also find ways to sell more high margin products (and services) to the customers that need them.
INVENTORY AND RELATIONSHIP MANAGEMENT The 2020 pandemic revealed just how fragile the supply chain is. The businesses that are thriving have planned several quarters in advance, have great supplier relationships and have the cash to hold adequate inventory on hand. They understand that seasonal minimum / maximum inventory levels are crucial to managing cash flow.
Just as important is employee management. All employees are a representation of your company and have a direct impact on its reputation, which is now measured by online reviews. Investing in employee recruitment and training is investing in your brand, and it does pay dividends.
The point is to focus the 168 hours you get each week on things that help you accomplish your retirement goal, while streamlining and minimizing the things that don’t.
Set a Date and an Amount I have personally found it effective to pick a specific date and amount to hit your retirement goal. It doesn’t have to be perfect, it just needs to make sense to you. For example: “I’d like to sell my business for $2 million by Jan. 1, 2025.”
When you visualize your goal, and commit it to writing, you’ll find yourself focusing on the things that move you toward that goal each day.