You Own a Portfolio of Opportunities
Something’s got to give! Business owners considering exiting their business are at the crossroads of Frustration Ave and Opportunity Blvd. For owners who have nurtured a business for decades, it can be very difficult to give up the benefits of their sweat equity. Maybe you’re tired, worn down by life and see no end to the daily grind. Perhaps you’re on top leading a very profitable business and the question might never have crossed your mind: Why Sell My Business and Why Sell Now?
The major lesson from corporate M&A that can be adopted by all SMB owners: the value of exit planning. Top corporate leaders see businesses as a portfolio of opportunities. Although founders may only have one business in their portfolio, seeing it as part of a larger plan and your business journey is an effective way to minimize an emotional decision. Ego is very fragile, and one of the greatest fears is the fear of being embarrassed in front of others.
Not knowing; unsure and the fear that comes with that is a pure human emotion and significantly influences our decisions. These feelings are natural, normal. They can and will cloud your judgment preventing you from seeing the opportunities in a sales process. Whether you’re concerned about how to find a buyer, how much your business is worth, if you even have a saleable asset, or what happens after you exit, these questions and more are daunting and your biggest hurdle to one day sell your business.
“I tried to sell once when the business was on the decline, and it was a disaster. Going through the process itself rejuvenated my passion and kickstarted my energy. With Scott’s help and three years later, the business was exit-ready. I was excited to go!” – Dave Sanderson
Every week you have dozens of decisions and directions you can take strategies to deploy. Do you agonize over them? No. Why? What is the best way to reduce or eliminate the overwhelm of doubt and the fear of the unknown? You know this, but when you add the element of personal emotion your clarity becomes cloudy. The answer is in the data, gather information, educate yourself. It’s not about tricks and traps in selling your life’s work, in selling a cash flowing asset. It’s about being prepared, being preventive, predicting the outcome that you know you must have for you and your family.
The more you know, the better your strategic decisions will be. The preparation of your business for an exit is complex and stressful. Remember knowledge is power and investing time is what ensures your opportunity sells for maximum value. The more you know now about how to make your business sellable, how to maximize its value, what makes it attractive to buyers, and what’s involved in the selling process, the better decisions you’ll make for your future.
12 Reasons Why Selling Your Business
- Tired, Burnt Out, Lost Interest. Decades running a business being the #1 problem solver, the answer man; years of stress take a toll on your energy and enthusiasm leading to losing sleep, slowly losing business, service, profit and eventually your reputation. Some days you have nothing left to give. These feelings overwhelm the man in the box, because he has no one to turn to who understands his situation. A decision to sell allows owners to catch their breath and recharge the batteries.
- Guilt, Worry, Regret. Am I letting my team down? Will my people still work hard? Will my customers get good service? Is selling the right decision? It’s natural to be worried, to feel guilty when you think about selling your business. You’ve invested so much time, effort, blood and tears into growing your business. You wouldn’t be you if you weren’t worried about what will happen to your employees. It’s time to step back, seek counsel, evaluate your options and decide when it makes sense for you and your family.
- Industry Changes, Market Shifts. The business landscape is constantly changing, and staying on top of industry trends and market shits is how business owners remain competitive. New technologies, products, government regs and world events ebb and flow daily. You realize how flexible, adaptable and willing you must be to adjust your operations accordingly. At some point, these changes can be overwhelming and motivate you to sell.
- Too Hard to Acquire New Customers. You are the closer! It’s been a minute since you were called in to do what you do best. The ship has been sailing adrift for a few years now. Sure, revenue is steady, earnings are hanging in there and as far as you know everyone is happy, more or less. You know what needs to happen – fresh blood! Sales cures all ills and you just don’t feel like kicking the can down the street.
- Can’t Support Growth or Business has Plateaued. Some business owners are strapped to a rocket, and that rocket needs capital. You’ve extended and overextended doing your level best to bootstrap your growth. But, it’s gone too far, too fast for you now. Conversely, you’ve had several years beating comps and now business has stalled. Both situs wear owners down and out physically, mentally and emotionally. If only…
- Kids Uninterested in Business. Maybe you experienced this feeling with your grandfather when he started the business, maybe not. Generations wane in favor of what the business does for them instead of what they can offer in return. “Rich father; noble son; poor grandson.” The three-generation myth is so pervasive that it can become a self-fulfilling prophecy. Our first deal was selling a 3rd generation home improvement center past its prime.
- Realize Financial Rewards by Selling. Entrepreneurs often sell their business when their value has increased considerably. The run up allows them to make a substantial profit and benefit from the value of their hard work. It’s running smoothly, generating profits, and no longer requires significant investments to maintain growth. The company has developed a strong customer base, brand recognition, and market presence. This allows the business owner to sell for a higher value and enjoy the fruits of their labor.
- Death, Health Issues & Divorce. Worst of the worst. If you’re dead, then you don’t have to deal with a process. If your health is failing or you get the long face from the doctor, you can shutter it or have someone sell it for you. If your spouse flies the coop, their attorney will want a piece of your ass times ten. This situ is no effin bueno…more later.
- Partner, Family Disputes. Another sour moment when the family situation becomes dark or your trusted partner(s) pick up the shiny Shun to stab you in the back. One of the parties may be unable to afford to keep the business due to financial disagreements. In this case, selling may be the only option to ensure both parties can move on and start fresh.
- Another Business Opportunity. You’re ready for the next big thing. Selling your business when you’re at your peak means transitioning while you’re still full of energy and ideas. On top of that, selling your business can generate the needed capital for launching a new venture, or just enjoy life. After years of hard work and dedication, some business owners may want to sell their profitable business and pursue a different career path.
- See Business Achieve More Success. We often hear, “I’d like to hang in there 5 more years.” Ok, define what ‘hang in there means’ and how does that answer prepare you for an outcome? Knowing what matters most to you ahead of time will drive the path forward. A financial buyer will keep you around for a year while they put a team and process in place to grow NewCo 10X in 5-7 years. That second bite of the apple can be more rewarding than the first one.
- Timing is Right. When a business grows in popularity and demand, it can become an attractive target for potential buyers. A high-demand business will typically sell for a premium price, as buyers are willing to pay more for its success and potential. You should also be realistic and patient when selling a business in high demand.
