After working through all the stages of the business life cycle (The Idea, Actual Work, Look Out World!, We’ve Arrived, Growth & Expansion, Downhill Slide), we’ve finally arrived at the end. One way or another, intentionally or unintentionally, planned or unplanned, someday you will exit your business. This could be a day you’ve been dreading and fighting to avoid – the day you hang a “Closed” sign on the door. Or it could be the day you’ve been waiting for – the chance to cash out your business! Let’s talk about each scenario separately.
It can be very difficult to lose a business. Some authors have compared it to losing a family member. While that might seem a little dramatic, in reality it’s probably not too far off. For most business owners, the business is a part of the family. While the potential financial ramifications are obvious (potential change in standard of living, perhaps even bankruptcy), people often forget the psychological ramifications. I hope you who are reading this blog don’t have to go through this scenario, but if you do, remember that just because your business “failed”, doesn’t mean you personally are a failure. Pick yourself up and start again. There’s always another opportunity if you keep looking for it.
On a brighter note, maybe you’ve just reached a point where you’re ready to move on to something else, whether it’s a new business (!) or perhaps retirement. Regardless, you’re looking to sell. But what are you selling? Unfortunately, many business owners overestimate the real value of their business by almost ridiculous amounts. This ties back to the fact that the business is like another family member – it has immense value to you, so therefore you want to project that value to others. But what will help people see that value?
Before putting the business up for sale, look at your operations, management, competitive barriers, people, etc., and ask yourself if there’s any way to make it more attractive to a buyer. Often, the people who are most likely to be interested are people who are already in the business. Do you have people within the business who could potentially be “the boss(es)”?
No matter how you handle a sale of your business, whether to insiders or outsiders, family or strangers, the key is to plan ahead. When do you think you’ll want out of the business? If the idea is for the business to go to someone internally or to family, will they be ready? How will the $$ work? Have they been trained? Don’t wait until the day before retirement to plan your exit.
If you’re approaching this point with your business, what are you planning to do? How will you transition yourself out of the business, both from a work standpoint and a financial one?
Hopefully something in this series has triggered a thought in your mind: Where is my business today? How am I going to manage this stage? How am I going to move to (or avoid) the next stage?