You get things done. You make things happen. You figure it out and solve problems every day and you’ve been amazing people for years. You diagnose problems, fix transmissions, and much more. You’ve successfully operated a small business. You’ve helped many, many customers. You’ve managed employees, paid bills and taxes, and most of the time had money left over.
Properly preparing and selling your business is just one more problem to solve. You know the drill: Evaluate the situation. Determine the resources you need. Test trial solutions. Use specialized tools. Surround yourself with expert knowledge and research to reduce errors and avoid disaster.
There are differences. Yes, you’ve fixed cars and then sold them. Selling a business — not just any business but your business — is different. This shop, well, it’s like your favorite jeans. It’s like a pair of gloves or your skin itself. Now to prepare it and sell it… well, what are you going to do?
You have to create a new future, something better to move toward. This is why you must plan now. Don’t let it crash into the dirt because you’ve had an accident or heart attack and can’t finish the job yourself.
After being the boss for so long, identifying a person with potential — such as an employee or a tech looking for a job — is like seeing a diamond in the rough, waiting to be cut and set in a ring. You have that opportunity.
In previous issues, we discussed different potential buyers for your business. Yes, it takes time to develop a new leader and train them to become a manager, then a partner who buys you out over time. But your return on investment can make it very worthwhile.
There’s a group of transmission business owners working together every week or so to discuss what’s working and what’s a struggle as they attempt to achieve their smart exit. There’s group and private work necessary for each business to create its own strategy and timeframe.
Maybe you’re ready to sell now, but would like to increase your business’s value as you prepare to sell, to earn more from the sale.
The selling-your-business phase of your career is quite different from the starting and administrating phases. When you start an enterprise, you can do it part time. You can put the new company on hold and resume it later. You can start, fail, and then start again until you get it right. Walt Disney and many other successful entrepreneurs had several false starts.
When you’re in the administrative phase, you can keep business the same, grow slowly, cut back, and adjust, depending upon the economy, your employees, and your abilities and resources. By comparison, when you sell, there are new risks in addition to those you’ve already faced.
You can tell too much or too little to prospects interested in buying your business. If you tell too much, you might discourage them or create a competitor who takes what you’ve said about your strengths and weaknesses, and opens a shop down the street.
You could tell too little and not inspire the shopper with what their potential could be purchasing your shop. Or maybe they’ll see a too-optimistic picture, buy the business, and then not be able to realize the sales and profits they believe you promised. They could sue for a refund because of misinformation.
Other risks are them buying, taking over, and failing. They fire or run off your veteran techs, who they promised to treat fairly. They botch up jobs from customers you worked years to win. You were proud of your shop’s good name and worked hard to keep untarnished, and you’re embarrassed when customers and community colleagues you’ve known for years have bad experiences and hear the horror stories.
Worse yet, you agree to carry a loan from the buyer. The new owner depletes your inventory, breaks or takes your tools, ruins your reputation, and leaves you to mount a legal battle to regain control. Or you would, but you can’t find anyone to sue. Now you have to salvage your company and rebuild its reputation to sell it again.
Your staff becomes uncomfortable with your talk of selling, shoppers walking around, asking questions, and conducting interviews. You don’t have employment agreements with your staff, and a key tech or two ask for bonuses to stay or they’ll move on, leaving your shop full of unfinished jobs with delivery deadlines. Pay up or they’re gone.
You get a sweetheart offer from an experienced, sophisticated buyer. You accept the offer, then go through 3+ months of due diligence from his accountants, who take over your office. There’s a clause in their offer that, if you can’t substantiate your income estimates for this year, they can reduce their offer, based upon their revised sales and profit estimates.
They may offer you the chance to operate the business for a period of months and, if you can produce the sales and profits you’d predicted, then they’ll pay the full price. You’re in a lose-lose situation: Take the much lower price or work for them to earn full price. You accept working for them and it’s much different working the shop with their administration, goals, and requirements than when you owned it.
Or you get a good offer, all goes smoothly, but this is all new to you and you don’t do all your planning and sales work, because, hey, it’s your first time. You forfeit 2/3 of the sale price in taxes and transaction fees.
It’s said that half of all business sales have a significant flaw, regardless of the size of the business sold, with attorneys or with just a buyer and seller. Business sales are tricky. Preparing and selling your business is like remodeling your kitchen, bath, and bedroom while trying to live there and have a normal life.
Get expert help to assist you in preparing, planning, and researching. Doing this slowly and doing it right is better than fast and sloppy. It’s a real challenge to continue operating the business, while growing it within your cash flow constraints, and preparing and then executing a successful sale.
Get expert help to make a smart exit.
John E. Anderson will be speaking at this year’s Expo. John is a longtime business coach who helps business owners evaluate their businesses, adjust their operating practices, build a strategic plan and make a Smart Exit™.
In the coming issues, John will discuss some of the strategies he’s developed. He’ll show you how to turn your business around, so you can answer the three questions, and ultimately, find a smart exit that works for you.
Post your questions and observations on the ATRA Forum. A CEO Circle of shop owners is forming to discuss these topics leading up to the EXPO. Email ATRA for further information firstname.lastname@example.org