02 Apr Emotionally Preparing to Sell Your Business
K. Srikirishna has a worthwhile read in the Harvard Business Review. Adapted from his book The Art of a Happy Exit – How Smart Entrepreneurs Sell Their Businesses (Harper Business), Srikirishna looks beyond the mechanics of selling your business to what the emotional content of the experience can be (and often isn’t).
Anecdotes from high-tech and financial services executives illustrate this piece. At first blush, such “lessons learned” don’t seem all that relevant to small business owners. After all, what retail or auto repair business owner has the luxury of raising millions of dollars through venture capital, hiring New York investment banking firms for strategic advice, or working with an eight-person management team? All true, but it doesn’t entirely negate the possibility of a New Mexico small business owner adapting and reworking some of this advice.
Seek Clarity on Your Life’s Purpose
So far, so good. Who doesn’t want a lucid and inspiring sense purpose to provide a touchstone in their lives?
The author begins with a quote from Rich Langdale, a serial entrepreneur and founder of eight different companies. “I always enjoyed solving a problem, putting together a solution that customers want, and landing those first customers,” says Langdale. “What I don’t enjoy is then building out a team, scaling the business and doing all that entails.”
When you first started your business, you had a vision. Perhaps you were tired of working for someone else, or else you come from a family of small business owners and building and running your own company was in your blood. Beyond seeing a need that was not being met in your local market – whether it was for better customer service, more choice, or a product or service that simply wasn’t being offered – there also had to be an emotional component that set you down this path. A lot of people see such needs, but few take your initiative.
Dealing with employee issues, contending with rising vendors costs, or the many other day-to-day challenges of being the boss can overwhelm that spark that originally set you down this path. Staying attuned to your original motivation can be a source of solace and inspiration during the more taxing moments of being the one in charge. And that seed of what originally inspired you can also help you find fulfillment post sale.
Identifying your purpose will take time, so it is best begun well before you’re considering a sale. Ask yourself questions, such as: What excites you and gets you jumping out of bed each morning? What would you do if you had no constraints whatsoever? If you had only one year to live, what would you change and why? What do you visualize yourself doing after the sale of your business?
Ultimately, in my research I’ve found that the biggest cause of seller’s remorse is when the entrepreneur’s life feels directionless after the sale. After all, there’s only so much golfing or boating one can do.
Work On Your Business, Not In Your Business
When you have a gazillion projects you’re juggling or your barely standing at the end of a busy day, the thought that you can find the time or emotional resources to then go and work “on” the business can feel like another entry on a forever growing to-do list.
All the same, it is important to integrate such practices into your work life. In many instances, the reason why an individual takes the leap to be their own boss was not because they wanted to be their own employee. Feeling that the company can’t run without you can be exhausting and lead to burn out.
Srikirishna has two simple exercises that can help you recalibrate the working on/working in dynamic, including:
- Note the times when someone in your organization, a customer, or business partner reaches out to you to make a decision. At the end of each day and week, take a look at all that you did or handled, and identify who else within your organization could have done it instead.
- Write down the instructions you’d leave for your team members if you were going to be away for a two-week vacation without phone or Internet. This will highlight which areas of the business can run without you, which areas cause you the most concern or stress, and what you believe needs to be absolutely handled by you.
Examine if that is true. Learning to let go isn’t necessarily easy, but the benefits are manifold. “[It frees] up time for you to focus on the important rather than the urgent — in other words, working on your business rather than in your business, where the quotidian minutiae can drown you.”
Plan Ahead for a Sale
Maybe you’re thoroughly enjoying running your company and that last thing you have in mind is bringing it to market. Congratulations! This is a clear marker that you’re doing many things right. Regardless, planning for a sale of your business brings a useful perspective that can build upon your momentum. It can be a disciplining factor that helps keep you and your team focused.
Using the example of Tim McCarthy, the founder of a consulting business focused on major restaurant chains, Srikirishna provides the following anecdote:
“One day Tim’s accountant asked him the purpose question: What did Tim want to do with his life? When Tim answered that he wanted to retire by age 50 to focus on giving back to his northeastern Ohio community, his accountant pointed out a problem: Tim couldn’t sell a consulting business as there was no intrinsic value to it without him in it.
“Tim then set out to systemically transform his business from a consulting service to a marketing database company, Workplace Impact. He hired a New York-based investment banking firm to identify which issues within his company needed to be addressed to make it attractive for a potential buyer. Five major issues were identified, and Tim set these up as performance targets for his eight-person management team. Senior officers began running the company on a day-to-day basis, and Tim began working from home. “I came in once a week for a [one-hour] review meeting … and once a month for a half-day review of everything that was going on,” he recalls. Over the next four years they hit all five of their targets attracting interest from prospective buyers and ultimately successfully sold the business.”
We don’t all have the option of transforming our business, but subtly recalibrating its trajectory, building upon its strengths, or expanding its market reach can be emotionally rewarding experience and put you in a better position to sale should that time ever come.