If you are a business owner in California, you do this in case you hear the magic words “I would like to buy your business.” And better still, “Are you willing to sell?
I was recently helping a business owner, whom I will call Rob, conclude the sale of his business. It was a great outcome, as Rob had always run his business as if it were for sale. His story is also inspiring, so let’s take a look at the details.
The time is the day after Labor Day, 2008. Rob, as the new owner of the business, is just closing escrow on his ‘Dream business.’ The excitement was evident as Rob finalized eight months of work, which included finding the right business, negotiating the transaction, obtaining an SBA loan, arguing and agreeing on terms with the landlord for a lease, conducting due diligence, and ultimately closing the sale.
Start of the ‘Great Recession’
If you go back to August and September 2008, you will recall that this marked the beginning of what we now consider the ‘Great Recession.’ The collapse of the housing market was beginning to gain momentum with the US Treasury seizing control of mortgage giants Fannie Mae and Freddie Mac.
About a week later, the government was able to save AIG Inc. However, the investment banking company Lehman Brothers was not in a position to save itself and was allowed to collapse. A new term was now on everyone’s lips: ‘bailout.’
This word had different meanings for different people, depending on whether they were the ‘bailor’ or the ‘bailee’. Additionally, there were other chaotic developments on Wall Street, in the automotive industry, and on Main Street. In simple terms, it is not the best place or time to buy a new business with a purchase price of $ 1.1 million.
In Rob’s situation, it came with great excitement, as it also meant relocating to a new town and learning to own and operate his business.
‘Life Happens’
Now, fast forward only a short six months to February 2009, and Rob was dealing with the loss of his General Manager, who had died. The GM brought a skill set that no one else in the company had. The slowdown in the economy was gaining momentum, which not only led to slower sales but also caused customers to be slow to pay for work the business had completed. If that was not enough, Rob’s wife had decided to leave him and file for divorce.
This ‘perfect storm’ of happenings meant Rob had to return to a full-time job to support his broken family and ask the previous owner to return to the business and operate it, which he agreed to do.
In this scenario, Rob was the owner of the business for three years and had decided that it was time to sell, but the great thing in Rob’s case was that a Buyer approached him to ask, “I would like to buy your business; are you interested in selling?”
Business Ownership Comes With Many Unknown Variables
Owning, managing, and operating a business entails numerous known and unknown variables. Those variables can not only relate to the business but also involve personal issues such as health, family, marriage, and other aspects of modern life. Very frequently, there is a limit to the options for fixing a problem because the situation is entirely beyond anyone’s control.
Unknown variables are particularly applicable when selling a business. The owner must update all the necessary information before taking the business to market. This is because events may change quickly and unexpectedly, which could prevent the business from selling.
Owning and Operating Your Own Business Brings Incredible Rewards
The skills you learn, the other business owners you meet, and their stories can be inspiring. There is nothing better than living life on your terms and accepting the risks and responsibilities that come with it. When it comes to selling your business, ensure that all your ducks are in a row so the process is as smooth as possible.
The takeaway I stress to all business owners is ‘to always run your business as if it is for sale.’ This approach encourages the owner to make the right business decisions, such as ensuring that financial statements are up to date, legal contracts are in order, all employee responsibilities are current, and, most importantly, that customers do not have any complaints.
If you would like more information, this link will allow you to download a copy of my book, Successfully Sell Your Business.
Further reading