Why Do You Still Own Your Business?
I recently met with a business owner who was telling me how he took his entire team of 15 people to attend his retirement party in the Bahamas. The trip was five years ago, and he still owns and operates his business. Turns out, when the owner returned from the retirement trip a good customer persuaded him to help out one last time. One last time turned into back to work full time, for good. The owner’s son, who was poised to take over the business, was not pleased with dad, and decided to seek work elsewhere. The succession plan they had agreed to blew up. Bottom line, the owner wasn’t ready to let go.
I see it often, where business owners know they should move on but just can’t make that move. Their family is on them to sell yet they can’t imagine life not being in control of their business.
There are many reasons why an owner holds on to a business too long. Here are a few I see:
Their Business is Their Identity
Business owners enjoy running the show, being the boss, and getting the accolades. With a successful business, they like the way they are perceived within the community. When people mention an owner’s business they often connect the owner’s name with the business.
The Owner Does the Math
I’ve heard more than once an owner stating if they were to hold on to their business 3-5 more years, they could make the same amount of money as if they were to sell. That may be true, but can you control the future? There are many things out of an owner’s control that could disrupt the profit-making business such as a partner or spouse’s death, a national competitor coming into town taking major market share, a natural disaster, or a health issue for the owner.
They Just Don’t Have a Plan
This is a big one. Why exit your business when you don’t know how to do it? The Exit Planning Institute has found that 80% of business owners had no written plan to exit their business.
When an owner holds on to their business too long it becomes stale. They don’t seem to be as aggressive and creative as they once were; they become complacent. They are holding on, collecting a check, and getting by. A stale business normally doesn’t have strong financials, making it a difficult business to sell. To maximize profits, owners need to sell when their business is as financially strong as ever.
There are steps an owner can take now to prepare for a successful sale of their business. Engage with a business coach or exit planner to start the process. Ideally, this should be done 3-5 years prior to selling. Your coach will help you get your business in shape to sell while also preparing you for the next chapter in your life. Become passionate as a mentor or engage in a charity or hobby that can replace the identity and time you once spent as a business owner. You’ll be happier and healthier.
This article was written by Sam Thompson, CBI, M&AMI. Sam is the president and founder of Transitions In Business, a Twin Cities based M&A firm that specializes in selling business to business and healthcare, transportation, manufacturing, distribution and construction/trade services companies. Sam is a Merger and Acquisition Master Intermediary (M&AMI) and a Certified Business Intermediary (CBI) who has successfully guided countless business owners through the sale or merger of their company. Prior to becoming a business broker, Sam was a successful CEO and business owner for 29 years before selling his $16 million conference and event management company. If you have questions about this article and would like to connect with Sam click on the link below.
