“Do what you do not know what to do” may seem a tongue twisting paradox, challenging to articulate but far more difficult to action as is the reality of change. The decision to sell a business is complicated. It is doing something in which you don’t have much experience. It is doing something that you do not know what to do or how to do.
Few owners wake one morning saying, “I’m going to sell my business today”. Decisions to sell evolve over time, driven by internal and external events and life circumstances. Similarly, how to go about this major task also evolves over time.
Reasons to sell
“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams” Gabriel Garcia Marquez.
Motivations for selling a business and transitioning into a next phase of life may not be a single specific matter but more often are varied and many, collectively pointing to an exit.
They range from personal or family reasons such as heath, age and exhaustion. Changes in the business, the industry or size of business can be a challenge to an owners skills. A desire of release from ongoing leadership demands with the freedom to pursue new dreams. De-risking family wealth, accessing capital and enabling financial liquidity are also important. Release of cash previously tied up enables owners to pursue new activities, doing what you do not know what to do! These can all influence sell decisions.
Eventually private companies must be sold, passed-on or shut down! Owners may however rely on a “do nothing roll of the dice” approach. On their passing, a now rudderless company whose loyal staff and committed customers quickly start jumping ship. The company is now left to be sorted out by those left behind!
The sale is not always about money. In the long term, the fruits of investing in the owners existing business typically are better than investing the sale proceeds in alternative investments. You may however achieve an outstanding price!
Owning a business comes with the exhilaration and exuberant collegial celebrations of highest of highs but also the fears, anxieties and isolation of the lowest of lows. Will you miss this, why do you want to sell? What do you hope to get out of the sale, how much do you want for your business (yes cash), who would you like to sell to, how do you go about it?
When he does not know what to do, he does what he knows…
Getting to a point of making the decision to sell is tough. It means that an owner will be taking on new challenges, not comfortable, not easy and does not come naturally.
With challenges like this, owners tend to go back to doing what is easiest and what they know best; business as usual, what they have done before. “When he does not know what to do, he does what he knows”, yes another tongue twister.
This do-nothing approach is often easily explained by many reasoned self supporting thoughts (excuses). “What will I do afterwards” (somewhat selfish), or “nobody can run this business” (unrealistic), “I’ve got too much on” (always will have), “just secured a major contract” (the “game changer”, no often), “one good year will ensure a fantastic price” (unrealistic and not in the eyes of a buyer), who will buy this business (there is always a buyer, it does take time), “times are tough” or, “times are good” (is there ever the right time) …
Courage and Vision
Courage and vision are a key trait of entrepreneurs in establishing and building businesses. These characteristics must again be deployed in big doses when it comes to selling.
If you do go down the sale path, buyers only want to talk to sellers who are seriously considering selling. It could be 6 months or 2 years from the date of the first conversation, but if you do not feel ready to engage with buyers, don’t do it. You want to avoid burning bridges, and nothing turns off a buyer like a seller who plays games, the opposite also holds true.
Buyers are a different breed from your employees, customers, or suppliers. They are going to ask you about your failures and shortcomings. They are going to ask you about the good years and the bad ones. For many owners this can be a somewhat unsettling dialogue but at some point, it needs to be shared.
The costs of a good adviser are returned many times over by firstly making a deal happen, no small ask. A good adviser will steer you down the best path, find the right buyer, manage the highs and lows, explain the complexities, deal with the details, manage the interested parties and sale process, keep everyone sane (to a degree) and enable a good deal and good price.
Renew and refresh with hope and courage, re-imagine the future, rather not simply remembering or being remembered by the one thing or few things that went right. Do what you do not know what to do. Making a change cannot be a repeat of the past.
Enjoy the journey.
With reference to the former Leader of the Opposition in South Africa, Tony Leon, on what it takes to make a change of significance, and; Brent Beshore, The Messy Marketplace: Selling Your Business in a World of Imperfect Buyers – Boring Books