Remember the “Parable of the Boiled Frog?” If we put a frog near hot water it will sense danger and hop away. But if we put it in cool water and slowly heat the water, the frog, not responding to the changing conditions, will just sit there till it perishes in the boiling water.
How does a business owner avoid the ‘boiled frog’ fate? Whatever the business, there will be at a time sell it and move on. Making that transition can be a gut wrenching. Planning in advance is essential to making the transition that is effective and low stressful. When should he or she begin to thinking about selling/leaving the company?
There are a variety of opinions about when to start planning. Some say begin planning at start up – put a long term perspective on the process. (Remember the admonition of Steven R Covey in The 7 Habits of Highly Effective People to “Begin with the End in Mind!”) That’s probably ‘a long stretch’ for some people but there is wisdom in the suggestion.
Others suggest that a good time to start planning is during the ‘empty nest’ part of life – when the kids leave home and the rhythms of life change. We realize that the future will be different and there is a new incentive to ‘look down the path’ to a different lifestyle.
Certainly the ‘last chance’ to develop a transition strategy is when the owner is in his or her mid to late fifties. The clock is ticking. The future becomes less certain, fewer options are available and there is less time to execute the transition.
Let me give a personal perspective. For 32 years I worked in a business started by my Dad. During my time with the company, I guided it through a cultural and organizational metamorphosis to become the largest locally owned consulting engineering firm in the Buffalo – Niagara region. By then, I had developed new interests and it was time for me to move on. After five years of planning, I made the decision to sell my ownership in the business. It probably would have taken longer but my partners – the next generation - were in place and ready to buy the business from me. That business, now called The Wendel Companies, has continued to grow and is extremely successful. I didn’t retire. I made my life transition and formed the Peter Wendel Group. I know I made the right decision. As the saying goes, “The rest is history!”
The point is that a business can’t be sold unless the owner is ready to sell. The world is full of companies that ‘died on the vine’ because the owner hung on too long and ended up having to have a fire sale of buildings and equipment. There was minimal value left in the business itself.
A successful sale begins with a personal strategy. Developing that personal strategy is best done over time. For the owner to be ready to sell and move on he or she must have addressed a wide range of issues:
“I will sell my business when…….”
“I have a clear vision of what the next phase of my life will be – I have chosen my future lifestyle to achieve my vision.”
“I have chosen a lifestyle for the next phase of my life that has purpose and will give me fulfillment.”
“The next phase of my life will generate the level of income I need to supplement the income from the sale of my business.”
“I will sell my company to my partners, associates and family members” or
“I will sell my company to an outside buyer.”
The moral: the business will change over time. If the owner doesn’t sense the change, he or she will stay there too long and lose the chance to ‘get out when the time is right.’ They become a boiled frog!
What is your personal transition plan? Is it time to start planning? I help business owners who want to develop their life/work transitions into the next phase of their lives. I can help you. Contact me to set up a complimentary session to explore your options.
716 434 8688