GOING ONCE, GOING TWICE, SOLD!
The theoretical ability to sell one’s business is actually a reflection of its value to others. Here’s how translators can add tangible value to their services to make their business appealing to a potential buyer.
Is my translation business sellable?1 Whether or not you have plans to sell your business in the near future, this question is very important and relevant, and not just to those on the verge of retirement. The theoretical ability to sell one’s business is actually a reflection of its value to others. Therefore, evaluating what others value about the business will give you a better idea of its potential selling points and the areas that need improvement.
TAKING ON THE ELEPHANT IN THE ROOM
Many translators have a hard time separating themselves from the business they created. “I’m my company and my company is me,” some would say. For those lucky enough, the day will come to set down the keyboard and retire. At this point, if the business and the translator are inseparable, the business may not be very valuable to others. If clients are only interested in working with you, then there is no way to continue providing the same service with new ownership. For this reason, translators generally refer clients to a trusted colleague or simply leave them to fend for themselves.
But are we letting go too easily? Is there a way to build a business so that its value is not dependent on the person running it? Are our business practices and working methods unique, and could they conceivably be used by someone else? Is it easy for someone to see the value of what we’ve created and to build upon it so the business continues to grow? Taking the time to think about these questions can help reframe our understanding of translation practices, the role translators play in them, and their value to others. By exploring how we create value beyond ourselves, we can take on the elephant in the room and learn how to build our own businesses in a way that can hold value to a potential buyer. The first step is to think practically about potential buyers.
WHO WOULD WANT TO BUY MY BUSINESS?
The key to answering this question is to identify potential “interested parties” and figure out what value your business could provide them. If you can approach an interested party with potential for growth, they may consider buying your company instead of trying to grow their own organically. Here are a few suggestions for where to start your search.
Fellow Translators: If you have trusted colleagues who specialize in fields similar to yours, it might be worthwhile speaking to them to see if they have any interest in expanding their business through buying yours.
Boutique Translation Companies: Smaller companies who are looking to expand in your language set or field of specialization.
Main/Secondary Beneficiaries: Consider interested parties in your industry who may not currently focus on translation or editing, but may want to add such services.2
Now that you have a few ideas for who might want to buy your business, you need to analyze the business critically and think about what can be done to make it relevant and attractive to a potential buyer. The more confidently you can address the following issues, the more value you can add and the more attractive the business will look to a potential buyer.
8 STEPS TO ADD VALUE BY IMPROVING YOUR BUSINESS
1. Ironclad Numbers—Know Your Accounting: All stable businesses start with the most tedious part of the job—finances. Thoughts of selling or even evaluating a business can’t start until you audit the numbers and make sure they are defendable. Do you know what your profit/loss statement was last month? Do you have a separate bank account for your business? Do you know the current balance in your account? If you’re serious about evaluating the business, it’s worth considering hiring a professional accounting or auditing firm to complete a review of your finances and give you tips for how to improve your financial standing.
2. Mile 1, Not Mile 26—What Can Your Business Become? It can be tempting to look back at what you’ve accomplished over the years and try to estimate the value of the business based on that success. However, it’s much more critical to get into the mindset of a buyer and conduct a thorough analysis to see how feasible it would be for someone to take what you’ve created and potentially grow the business to something even greater than it is today. Remember, you may be at mile 26 of your marathon, but your buyer is only at mile one and needs to see what could be coming ahead. Can your model find success in a different market, specialty, or language set? Do you have a unique work process that differentiates you from others that would be difficult to replicate?
Another question worth considering is whether you can cross-sell new services to your clients in addition to your core business. For example, in the world of academia, translators can offer formatting, indexing, and other services that are important to their clients. Your business may have the potential to open up new channels for your buyer that they didn’t have before (be it new languages, geographic reach, cultural understanding, or otherwise). You need to make it easy for others to see this potential.
3. The Golden Rule of Seesaws—Diversify Your Client Base: One question every potential buyer will want answered is how much of the business is dependent on a single client. Think about what would happen if your biggest client left tomorrow. If one client accounts for more than 25% of your work, that can be a big liability and create an imbalance that presents greater risk to a potential buyer. A business that profits $100,000 and has 100 clients can actually be more valuable than a business that profits $125,000 and has five clients.3
The same rule applies for the services we pay for. It’s important not to be overly reliant on one employee, freelancer, or service provider. Think about a backup plan for every system you have in place and how complex it would be to switch providers or replace a departing employee. In addition, consider how complicated it would be for someone else to come in and implement a change or tweak your workflow process without your help.
4. Reverse the Rollercoaster—Improve Cash Flow Processes: Cash flow comes down to the simple question of how quickly you’re paid for your work relative to when you need to pay your expenses. If you pay suppliers at the end of the month but only collect what you’re owed after 60 days, you’ll run out of money. Cash flow issues are one of the most common reasons businesses fail.4 When a potential buyer comes to check out the business, the first thing they’ll want to know is the payment terms you have in place for clients and suppliers. This is why agencies often have long payment terms. While I’m not suggesting adopting agency payment terms with your suppliers, it may be worth considering asking clients for (at least partial) payment up front so that you can continue to pay your suppliers on time while not being crippled by cash flow issues. One way to encourage clients to pay in advance is to incentivize early payment.
5. When Did You Drink Your Last Coke? Repeat Business is Critical: The average citizen of the world consumes a Coca-Cola product once every four days.5 One of the secrets of the Coca-Cola company’s success is its ability to attract repeat customers. If you want to succeed in selling your business, your clients must be on board, which requires their trust and loyalty. How often do your clients return with new assignments? What percentage of your clients are repeat and what percentage are new? How big are the projects from returning clients? In other words, how loyal are clients to you and your brand? Loyal clients can also help you gain “social proof,” meaning that your clients talk positively about you online and your positive reputation creates positive word of mouth referrals (the best kind!).
6. Be a Fruit Loop in a Bowl of Cheerios—Stand Out from the Competition: The more specialized you are and the more you stand out among peers and competitors, the more value is created. Review your marketing materials, such as your website or newsletters. What makes you different? Is this difference clearly visible to the average visitor? Does anyone care deeply about the services you provide?
One way to differentiate yourself and encourage loyalty is by providing clients with content that is thought provoking.6 Another way to set yourself apart is to take a positive attitude when others are defeatist. If the word on the street is how Google Translate is taking business away from translators, be the translator that demonstrates how your translations are inherently superior to anything a machine can produce.
7. The Disney Principle—Customer Satisfaction: You’ve likely been asked to fill out a customer satisfaction survey for some product or service. There’s one simple question that all major companies, including Disney, Apple, Google, and Facebook, ask: “How likely are you to recommend this service to a friend?” The collected answers to this question are known as the “net promoter score.”7 True satisfaction is reflected by people willing to personally go out on a limb and recommend your services to others.
This is why you need to start tracking your success with clients. It’s important that this evidence be more than anecdotal and can be backed up by data. Celebrating success and learning from critique is the only way businesses can grow. That may mean spending more time making sure your current clients are happy than on recruiting new ones. If you can demonstrate a high level of customer satisfaction, the value of the business can skyrocket.
8. Letting Go—How Dependent Is the Company on You? It’s important to document the processes used in your business. While no one translates the same way, there are concrete and repeatable actions that can be modelled and copied by others.8 Think about what processes can be automated to make things easier for someone else. For example, if you’ve created glossaries or termbases, these may be able to give your buyer a step up. Selling your business also requires the humility to say that there might be someone else in the world who can translate materials in your niche at a high level.
WHAT WILL YOUR LEGACY BE?
Selling a translation business isn’t a very common practice and comes with significant obstacles. However, by improving the value of your business while still working, you can create a system that’s efficient and sellable. You’ll also have a better chance of passing the business on to someone else when the time is right. This process requires reflection, honesty, and even the fortitude to let go.9 Parting with a business can be difficult and painful, but it can also be an important step. Beyond the financial considerations, it’s important to remember that you’ve created a legacy. Therefore, it’s important to take steps now to ensure that others will value what you’ve created and want to continue developing the business after you’ve moved on. What do you want the legacy of your business to be?
- This article is based on a presentation given at the 2017 ATA Annual Conference in Washington, DC. You can find a recording of the full presentation here: http://bit.ly/Staiman-ATA58.
- Davies, Stuart. “Small Business Growth through Acquisitions,” http://bit.ly/Stuart-acquisitions. One example is academic publishers who have added language services to their portfolio to expand the range of services they offer their clientele.
- Kokemuller, Neil. “Diversification and Its Importance,” http://bit.ly/Neil-diversification.
- Huls, Alexander. “The Key to Managing Profit and Cash Flow for Your Small Business and Knowing the Difference between the Two,” http://bit.ly/Huls-small-business.
- Bhasin, Kim. “15 Facts about Coca-Cola that Will Blow Your Mind,” http://bit.ly/Kim-Coca-Cola.
- For an example from the world of academia, see: Lagotte, Brian. “Academic Editing Tips: How to Use Your Abstract as a Tool to Create New Publishing Opportunities,” http://bit.ly/Lagotte
- Information on Net Promoter can be found at http://bit.ly/Net-Promoter.
- For more on this topic, see Warrillow, John. Built to Sell: Creating a Business That Can Thrive without You (Portfolio, 2012), http://bit.ly/Warrillow-sell.
- Handelsman, Mike. “Managing the Emotional Toll of Selling Your Small Business,” http://bit.ly/Handelsman-small-business.
Avi Staiman is the founder and managing director of Academic Language Experts, a company based in Jerusalem, Israel, that has helped clients publish their academic research since 2011. Prior to founding the company, he worked as a freelance translator and editor in the humanities and social sciences. He has an MA in education from the Hebrew University of Jerusalem. Contact: firstname.lastname@example.org.
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