What if something happened to you tomorrow? What if someone made you a job offer you couldn’t refuse? What if you decided it’s time to retire? Or just can’t take it any more?
Ask yourself these questions: Does your “book of business” have any value? Do you really have anything to sell?
I can assure you that it does have value—or it will—if you start to develop an exit strategy right now.
So what’s makes your business valuable and what’s a good exit strategy?
First, let me begin with my very personal story about selling my mortgage company.
After being a loan officer for 18 years, my sister Becky and I decided to start our own mortgage company. Becky and I were the perfect match. Her previous jobs included selling office equipment to large companies—moving on to selling accounting software and ultimately was hired be a major accounting firm to show accountants how to use the software and automate their accounts. Her expertise was in administration and mine was sales.
After three years into starting the first successful mortgage broker company in our area, Becky was diagnosed with stage 3 breast cancer and her prognosis was about six months to live.
After the initial shock and grief, we had a heart-to-heart on what is the “value” of our little operation and what would we have to do to create an exit strategy.
Becky did live for another sever years and passed on in 2002, but the moral of the story is that we did sell our business—and for lot of money.
What makes your business valuable?
Value is the “accountable record” of your business and the “systems” you have created that someone else can duplicate.
First, Becky and I determined that the value of our business was not the furniture and the computers—but the clients’ information contained on the 1003 form. We had 2,000 closed loan files in the basement of our building. It took us almost a year to dissect every one of those files, using 18 different pieces of data from the 1003. The goal was that even my 13-year old daughter could look up their information and get a financial snapshot of each client. (Check out online training with 30 database building lessons at
In addition to closed loan clients, we had entirely separate databases for our corporate clients; apartment complex lists; real estate agents; builders; and prospects.
Secondly, create different procedural manuals for everything (Think McDonald’s here) We had a hiring procedures manual; processing manual; closing manual; and even had separate manuals for each consumer niche we marketed to. That’s why I was able to credit the consumer direct marketing kits that I offer to loan officers today.
The manuals we constantly being updated so if we hired someone new, they could read any of the manuals and know what the company’s rules were.
Third, keep your financials current! With her accounting background, Becky knew exactly where every penny of income came from, where it was spent and had created charts and graphs to show our progress. We hired a CPA to review our books quarterly (most people wait until the end of the year to send to the accountant) to make sure they were correct and advise us where we could save even more money.
Even if you don’t own a company and are as individual loan officer, I suggest that you keep track of your income and expenses (based on your book of business) so a “buyer” can see the amount of income they can expect to earn from your database.
Exit Strategy Tips
1. Determine who is your ideal “buyer” of your book of business? Our ideal buyer was our local competitors (yes, other mortgage brokers) and we made sure we were friends with all of them. What made our business valuable was that we were able to sell our different databases to different loan officers and companies.
2. Keep a three-to-five year history of your financials and keep them current. Make sure they are easy to interpret and a buyer can understand where your income comes from.
3. Keep track of everything that you do. And create systems (and manuals) that can be easily duplicated.
4. Create, segment and maintain your databases. However you “niche” it, it’s best not to lump everyone into one main database.
5. Let people know that your business is for sale, even if you are not ready to sell it yet. You never know who will be interested and what price they are willing to pay. We sold our business about a year before we were ready – but since our competitors knew of Becky’s illness and we put the word out, we got some pretty great offers—the timing is not always perfect for you, but the money made up for all of them.
The whole key to your exit strategy is to be ready for all opportunities that might come your way—both planned and unplanned.
Karen Deis is president of
