by Susan Power, MBA, CHRL, ACC Founder & CEO of PowerUp Leadership
Multiply Your Leaders to Grow Your Business
As a serial entrepreneur, now building my second business, PowerUp Leadership, I have been reflecting on lessons learned from building and selling my first business. In 2010 I founded my first business venture in St. John’s, Newfoundland & Labrador, Canada and sold my business six years later. It was so hard for me to sell my business, as I considered it my third baby.
At the time, oil and gas had crashed, and there were six houses for sale on our street (none sold). I made the decision to go get some more senior work experience at JD Irving Limited, the right decision for my career at the time.
In retrospect, I am proud to have built and sold a business and I have learned many lessons along my entrepreneurship journey.
“Business relationships are built on trust and every decision you make either builds or erodes that trust.”
Lesson One: Give Yourself Time When the Goal is to Sell Your Business
There are a lot of considerations to be had in selling a business. In retrospect, it probably takes six months to be fully prepared to negotiate a business sale. The basic valuation of a business requires consulting multiple accountants to assess, and gain a full perspective of the fair market value of the purchase price. It is important when selling a business to leave yourself adequate time. As the current owner, it is also important to also assess whether you are ready to exit the business. Many business owners do not want to sell their business, and emotionally the exiting owner needs to be in the ready to let go.
Lesson Two: Check for Values and Chemistry Fit with Incoming Buyer
Selling your business is not purely just a transactional decision to go with the highest purchase price. As the founder of a business, your name and reputation will be permanently linked with the business. As a result, it is a two-way communication, to determine if the the incoming owner is a fit with how you do business and the values that they operate by. The network of relationships that you have spent years building with employees, suppliers, and customers are being handed over to a new individual, and you need to be selective and ensure fit with who is selected for the hand-off. Your reputation and brand will be connected to this business for years to come and this is not a decision to take lightly. As a result, you need to leave yourself time to conduct your own due diligence, including reference checks, and gut check on the new owner, otherwise it is a risk that it may be a mismatch. As the founder of the business you only want to hand over your customers to a buyer who can service them better or as well as you did, and this is important to keep in mind.
Lesson Three: Create a Succession Plan with the Buyer
It takes time to execute a succession plan for the new owner, everything from hiring new employees, to the transfer of goodwill from existing customers, and this cannot be rushed to move onto your next opportunity. The customers need to feel comfortable with the incoming owners and the new employees who will be servicing them. Ideally, three to six months of overlap will occur between the exiting owners and the incoming owners. This time can serve as a bridge so the customers do not feel deserted by the existing owner. It takes some time to have a seamless transition to demonstrate to the new operators how clients are accustomed to be serviced.
Lesson Four: Take Time to Test the Market for Multiple Bids
Take time to test the market for multiple bids, and proactively reach out to organizations outside of your local market area who may be a potential buyer. Accountants are frequently approached for business sales, and having the right accountant and/or business broker to represent you can ensure that you find the optimal buyer of your business both for you and for your customers.