Always run your business as if it is for sale
Always run your business as if it is for sale in case you hear the magic words “I would like to buy your business. Are you interested in selling?”
I was recently helping a business owner, and I will call him Rob, conclude the selling of his business with a great outcome because he always ran his business as if it was for sale. His story is also inspiring so let us have 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 obvious as Rob was concluding just on 8 months of work finding the right business, negotiating the transaction, obtaining an SBA loan, coming to terms with the landlord, completing due diligence and eventually closing the sale.
If you go back to August and September 2008 you will remember that this was what we now consider the start of 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 saved AIG Inc, the investment banking company Lehman Brothers was not saved but allowed to collapse, and a new word was now on everyone’s lips called ‘bailout.’ This word had different meanings for different people depending on if you were the ‘bailor’ or the ‘bailee’ plus there were other chaotic happenings on Wall Street to the auto industry to Main Street. In simple terms, not the best place or time to buy a new business with a purchase price of $1,100,000.
In Rob’s situation, he was also excited as it meant relocating to a new town about 2 hours from where he lived as well as learning to own and operate his business.
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 taking 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 customers were 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.
With this scenario, Rob had now owned the business for three years and decided 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?”
Owning, managing and operating a business comes with many known and unknown variables. Those variables can not only be business but often are personal issues such as health, family, marriage and other issues of modern life. Very often the options available are limited because the situation is totally out of any one person’s control. The best outcome can only be arrived at by doing no more than managing what variables are available.
This applies, in particular, when selling a business. It’s important that the owner gets all the pieces in place and lined up before taking the business to market or events may change quickly and unexpectedly to 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 go with the territory. When it comes to selling your business, make sure all your ducks are in a row so the process is as smooth sailing as possible.
The takeaway I stress to all business owners is ‘to always run the business as if it is for sale.’ This approach pushes the owner to make better business decisions such as ensuring the financial statements are up to date, legal contracts in order, all employee responsibilities are being met and most important of all, the customers are happy.
If you would like more information then this link will allow you to buy and download a copy of my book: Successfully Sell Your Business.