What Gladwell's 10,000 Hour Rule Means For Selling Your Business
Best-selling author Malcom Gladwell frequently refers to the "10,000-hour rule" in his book, "Outliers." The idea is that it takes approximately 10,000 hours of dedicated practice to reach the top level of proficiency in any activity. That's the equivalent to almost five years of working 40 hours per week, or about the same time it takes to complete both an undergraduate and graduate degree.
Many business owners have spent years, and some even decades, learning their industry and building a successful business. They are absolute pros in their industry. Superstars even! Then along comes an opportunity to sell the business, a task they've never performed before. And like an amateur trying to pitch for a pro baseball team, drive in a NASCAR race, or play in the Masters Golf Tournament, some business owners try to sell their own companies and, predictably, achieve poor results. You need a pro when you are looking for the right investor to take your company to the next level. That pro is an investment banker.
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When you need an investor to take your business to the next level or when you are ready to sell your business, you need to deal with a highly skilled, professional who has a lot more than 10,000 hours of experience. They are the best at what they do.
Successful business owners, like professional athletes, succeed because they are supported by a great team. The best investment bankers in the world also have a support team. Their team provides the research, marketing, IT, legal assistance, and administrative support. This allows the banker to remain focused on serving the entrepreneur and on getting the best price and terms for their client, while the business owner remains focused on running their business during the sales process.
Some other traits of investment bankers: Many investment bankers hold advanced degrees in finance, management, economics, and/or other related degrees. Most understand how the owner has sacrificed and invested in the business and they have personal experience that only comes from having owned a business. Those who cultivate the widest networks can effectively market your business to ideal investors well beyond the reach of your local region. They know how to secure the best price and terms, and the best way to market your company. Through years of working with owners and investors, a professional investment banker knows how to identify financial and operational deficiencies in a business and possesses the know-how to address those issues and prepare for the questions investors will ask.
You--the business owner--are a pro at what you do. That may be directing the operations of a multi-million dollar oil field services, technology, healthcare, or other type of company. You are expert in your field. When you are ready to convert the years of hard work you have invested, you want an expert in your corner that specializes in the transactional realities of the M&A process.
You rely upon accountants to keep your financial information accurate. You hire a lawyer when you need sound legal advice. You owe it to yourself to hire a professional investment banker when you need cash to grow, or when you are ready to sell. Unless, of course, you have 10,000 hours of free time on your hands.