Selling your business can be very tough.
There are questions to be answered, documentation that needs to be provided, brokers and attorneys involved – it can become very complicated very fast. In addition, all of your hard work is about to be exchanged for a substantial amount of someone else’s money, so emotions are likely to run high.
If you have never sold a business before, knowing what you’re in for can be very helpful in preparing yourself for this very stressful time. This is Part 1 of a series of articles that will address the elements of selling a business you may not have considered, but will shortly be confronted with. Part 1? It’s not your baby anymore…
As business owners, we can totally understand the the feeling that your business is your life. You have lived and breathed this business, working day and night to make it into what it is today.
If your business is such a major part of who you are, you may feel like it would be impossible for the business to run without you. While this feeling has worked to motivate you in the past, when the time comes to sell your business to someone else, it can be a big problem.
The truth of the matter is, the business can and will run with someone else at the helm. Take some time before you get to the closing table to think about why you are selling and about what life will be like post-sale. These new goals will help to keep you focused on the goal at hand – getting your business sold.
Why do you need to stay focused in this process? It can be very easy get off track and for your deal to fall apart if you don’t. Here’s an example:
The seller of a small family-run bakery is in the middle of due diligence with a serious buyer. In every interaction with the buyer and the buyer’s broker, the seller obsessively describes the origin of the recipes, the design concept he used to create the decor, the thought process behind the layout of the menu, etc. These parts of the business really matter to him, and he wants his attention to detail and passion to continue under the new ownership. The buyer, on the other hand, only wants facts. She only wants to see the numbers and the contracts. For this buyer, the bakery is a location that works but is in need of an updated menu and decor. The seller becomes very offended by the buyer’s lack of consideration for the aesthetic parts of the business, and although they are just days away from closing, the seller suddenly decides he’s had enough. If she can’t truly understand the business the way he wants her to, then she can’t have it. The end result? He can’t sell, so he gives the business to his son. His son, who wants to pursue a different path, ends up closing the bakery for good four months into ownership.
Don’t be this seller! The owner in this example had a chance to get a return on all of the investment of time, energy and money he put into his business. Instead he ended up with a total loss.
What you need to understand as a seller is that the new person, your buyer, is not going to care about your emotional attachment to your business. All they are going to want to know is the the bottom line. If you are mentally prepared for this part of selling your business, then it won’t become a major issue in the middle of your sale.
Are you a seller who thinks your emotional attachment to your business might be an issue? Do you worry about the legacy of you business more than you think about what your goals are post-sale? Please feel free to leave us a comment or question, and we would be happy to help you address your concerns.