Got a buyer? Now what?
Training the new owner
If you’re actively working in the business, you’ll have to train someone to take over that job. In a business where the work is physically demanding, you might be tempted to limit candidates to people who are physically capable and willing to take on that work. If you do that, it’ll reduce the size of your pool of potential buyers.
Unless you are selling to a competitor who doesn’t need to be trained, training will come to come at the worst possible time. You’ve mentally decided to get out (and were there for months before selling), and now, you’re obligated to train this new person. Your sale isn’t really, truly final until that work is done.
The new owner may not even know that they like it yet. Perhaps they’ve done it for someone else for 15 years, and they think that’s what they want to do but they don’t know until they actually run/own it. What if it takes longer than expected? If you walk away, it could damage the business. If you have a fee for additional training in your sales deal (you should), then that still commits you to even more time.
This all started because you were ready to retire. Now you’re spending time training this person and may have to silence the thoughts of “I should have kept it,” “they don’t get it” or “will they ever learn?” Prepare for this.
Are you really ready to retire?
The idea is that this group of 60,000 Boomer business owners is ready to retire. Are you really? Do you know what’s going to occupy your time once you cash out? I’ve had conversations with a number of people who retired and were thrilled that they fished, hiked and golfed every day for three months … until they got bored. Some people don’t get bored with it. Some might cut back to every other day. Still, some are not cut out for 100% leisure.
A better question might be: “Are you ready to sell, or is this about getting out of working every day?” In a business where the work is physical, it’s easy to understand the desire to back off at some point. Our bodies start telling us that they aren’t 29 anymore. Maybe climbing ladders isn’t as easy or fun as it used to be.
You don’t have to go from “I own it/work in it every day” to “I have nothing to do with it.” There are other choices.
Maybe a competitor is better?
Selling to a competitor or complementary business should be an easier exit. Someone who is already successful and in a similar business is more likely to be able to organize the resources needed to buy you out since they’re already successful and have clientele in that market.
Somebody who owns a competitive/complementary business is more likely to stick with it. They know what they’re getting. So if you do get to a point where you agree for at least a partial owner finance, a competitor/complementary business is a better choice.
Don’t get me wrong, there are highly motivated, sharp people out there who are looking for an income and a job, and they’ll have bigger dreams than just buying a job. Maybe they’re going to buy yours first, then buy two or three more, and maybe make an empire out of it. You’ll know when you meet one of them — and you’ll know who is real and who is blowing smoke.
The real pain of selling
If you ask business owners who’ve sold their business, they’ll probably mention that due diligence was a pain. Someone doing proper research isn’t intentionally making it a hassle, but it’s a lot of preparation to satisfy due diligence questions. Be prepared for that before you say “It’s for sale.” Ask your banker, attorney and someone you know who has sold/bought a business recently about the processes. Prepare in advance, as it’s not fun to do that work under deadline when you have a buyer at the door, checkbook in hand. The last thing you really need is to feel the pressure of “I’ve got to produce all these documents and all these numbers under a deadline before they go buy something else.”
This information is available if your managerial accounting and business metrics are under control, but they usually aren’t.
Next week, we’ll consider other options.
Mark Riffey is an investor and advisor to small business owners. Want to learn more about Mark or ask him to write about a strategic, operations or marketing problem? See Mark’s site, contact him on LinkedIn or Twitter, or email him at firstname.lastname@example.org.