Seven Reasons to Sell Your Business

Business Owners are a special breed! They are independent people who want to be in charge, to make decisions. They love what they are doing – work is fun. Work is satisfying. Their work defines who they are.

As long as things are going well the thought of moving on and selling their business is foreign to them.
But a time will come to sell and move on. As a business owner you need to recognize that your world is going to change. You need to anticipate those changes and be prepared to sell your business. The goal is to ‘go out on top;’ to sell your business on your terms, on your timing.


HERE ARE SOME KEY REASONS TO BE PREPARED TO SELL YOUR BUSINESS:

YOU WILL CHANGE – You won’t have the energy to keep the company viable. You’ll no longer have the passion for the business.
Maybe you, your spouse or other family member will have health problems that will keep you from spending the time you need to run the business.
Or you might run out of ideas, finding that what used to work no longer gets the results you want.


YOUR BUSINESS ENVIRONMENT WILL CHANGE – Global competition, new technology or changing employee values are some factors that will demand new thinking. What got you here no longer works. Your company must reinvent itself to compete in the new world.
Change is essential and you may no longer be the person to lead the needed change.


YOU NEED TO MAKE ROOM FOR THE NEXT GENERATION – Not just family businesses. Any business ‘worth its salt’ needs to have people who have the passion and the ability to lead the business into the changing future.
The future of your business depends upon identifying people with potential, developing them and providing opportunities to grow into leadership roles.
If you fail to provide opportunities for your best people, the very ones you need the most, they will leave perhaps moving to work with your competition.


YOU WANT TO ‘GO OUT ON TOP’ - You have made an investment and built a strong viable business. Now you want to ‘harvest that investment’ by selling it and moving into a new phase of your life. This might happen anytime, independent of your age.


YOU HAVE AN OPPORTUITY TO SELL YOUR BUSINESS - Perhaps, when your business is ‘at the top of its mark,’ a prospective buyer will want to buy it, making an offer the just too good to pass up.
But if you are not prepared to sell and move on, you may pass up a ‘once in a lifetime’ opportunity.


NOTE: Sometimes a buyer will want you to stay on for a short period to assure a smooth transition.
Others may want you to remain indefinitely and continue to manage the business.
The advantage, in either instance, is that you have withdrawn your investment and still have a role. Your challenge is to consider the opportunity carefully to confirm that this arrangement matches your long term personal plans.
In either instance you have only deferred your personal move to independence for a few years.


YOU WANT TO RELOCATE – Perhaps it’s time to move to a warmer climate – one where you don’t have to deal with winter and can play golf or enjoy some other outdoor hobbies year around.
Maybe you want to ‘follow the kids’ who have relocated so you can be near your grandchildren.


YOU HAVE A NEW PASSION – Maybe the business isn’t what you want to do anymore and you want to move on. You want to let go of this business and start a new venture.
Perhaps the business has changed and you are required to do many duties which leaves you with too little time to do what really matters to you; too many management responsibilities and not enough time to work on projects or too little time to see customers, etc.


Selling your business is not a ‘traditional retirement.’ It’s an opportunity for a transition and a new beginning.
The sale is an act of harvesting the investment that you spent years building. It’s moving into a new phase of life – one that gives you new purpose, new meaning and new opportunities.
Making a successful transition is a multi-year process that merges three elements: personal, company and financial.
Even though you don’t want to sell now it’s essential to start planning to assure success.

What are your perspectives on selling a business?
Have you sold a business? Describe the experience. What did you learn that you can pass on to others?
Are you pondering selling? What are your concerns?


Want to explore the subject? Check out my web site http://www.life-work-transitions.com/ or contact me at pkwendel@aol.com or 716 434 8688

WHAT'S YOUR EXIT STRATEGY?

Someday you’ll leave your business – every business owner will.
Will you leave on your terms – when you want to or will you be pushed or carried out?


WHAT’S YOUR EXIT STRATEGY?
You have a range of choices.
You can ‘Die at your desk’ – you just keep working until the last ounce of energy leaves your body, and your heirs must pick up the pieces and close out the business.
Or you can just ‘Lock the door and walk away’ selling whatever you have left; plant, equipment and records often for pennies on the dollar. Minimal planning is needed to pull this one off!


THERE ARE TWO OTHER OPTIONS
Both of these oprions can enable you to ‘go out on top’ by selling the business when it has high value so you can harvest your investment and build a nest egg for the next phase of your life.
One transition option is an internal sale; you sell to your partners or management team. This option enables you to build an organization that is your legacy and gives you some input on who will carry your legacy forward. But you must select and develop your successors. And it may take several years for your buyers to complete the buyout.
Another transition option is an external sale to an outside third party. This can often be the most profitable because the buyers see a greater strategic value resulting from merging the two companies. Although finding the best buyer will take more time, completing the sale is usually faster than an internal sale.
The transition option you ultimately choose will depend on your answers to these questions:
• How can you maximize your return when you sell the business?
• Do you have potential buyers on staff; people who have the passion, skills, experience and financial resources to buy you out?
• Can you find external buyers who will pay you a premium?
• What do you want to do in the next phase of your life – after you sell your business?
• What is your time table – when do you want be free to move into your next phase?

HERE’S HOW I CAN HELP YOU.
Remember the old adage: Begin with the end in mind; What outcome do you want? Do you have an exit strategy to achieve that outcome?
My primary focus is helping business owners choose the future they want to create and guide them as the make the transition. It’s not retirement - an end; It’s a transition, beginning a new journey, one that can last decades.
In addition, if you intend an internal transfer, I can help you build the next generation of leaders/owners to carry your legacy forward.
Also, I can augment your team of legal and financial advisors to carry out your owner succession plan.
MY goal is to assist you in laying out your exit strategy well in advance of your needs with plenty of time to implement it in an effective, comprehensive manner.
I look forward to working with you to explore ways to help you lay out your exit strategy.

I invite you to visit my web site at: http://www.life-work-transitions.com/
Pete Wendel

MORE THAN JUST 'YOUR FINANCIAL FUTURE'

Pacific Life Insurance, the one with the whales in its TV commercials, asks the question “Are you prepared for your retirement years – twenty five or more of them?”


Of course, being a life insurance company the focus is on ‘Your financial future.”


Twenty five years of ‘retirement’ is a long time! And it’s a likely probability for a lot of baby boomers. And there’s more ahead than just the financial part. There’s your life - life after you, a business owner, sell your business!


Many, business owners have retained their financial and legal consultants to plan their financial future. That’s a good thing. It has been estimated that as much as 70 to 85 per cent of many business owner’s net worth is in her/his business. So it’s smart to have a plan to harvest that investment from the business and move it into a personal portfolio.


We all know of business owners who have no vision for life after retirement. So they just hold on to their business. They have no plans for the next phase of their life so they just keep doing what they know. They can’t move on! Instead of going out on top, they ‘stay when they should go,’ suffocating the business they built, that, in turn, sucks their personal savings back into the business to keep it alive.


It doesn’t have to be that way. In addition to having a financial plan, every business owner needs to plan for their personal future – their next phase – and for the future of the company without them.


The challenge is to think about their company and themselves as separate entities and to develop a transition plan, in advance, for each to go their own way. That’s more than just their financial future!


In future articles we’ll explore the non-financial elements of your future as a business owner contemplating retirement.

FIVE KEY QUESTIONS FOR EVERY BUSINESS OWNER

Sooner or later every business owner must address the question, “How will I successfully sell my business and move on with my life?”

Many of the owners I have talked to seem to be ‘marching in place’ acknowledging that they need to plan for their future but are in denial about the need to plan ahead. They seem to believe that the process is simple and the time to ‘make it happen’ will be short. Actually, that’s not the case for most of them.


Every Business Owner needs to develop a transition strategy with plenty of time to execute it 'on their time table' to withdraw their equity, assure the continued success of their business and, prepare, personally, for the 'next phase' of their life.

The transition strategy must address three key areas of concern:
   Financial
   Personal
   Company
They often have addressed the financial aspect but not the other two.

Here are five key questions for the Business Owner to answer that become the building blocks of each Transition Strategy:
   1) How will I harvest my investment?
   2) Who will purchase my business?
             Will I sell to an external buyer?
             Will I sell internally - to my family, partners, key staff?
   3) What is the legacy I want to leave?
   4) What do I want to do in the next phase of my life?
   5) What is my timetable?

Developing and implementing a Transition Strategy can be a long term process that begins with working out the answer to these questions, planning the strategy and identifying the action steps to 'make it all happen.'

All these questions are inter-related. For instance, the owner must decide who the prospective buyers might be. If it will be internal buyers, the seller must determine that the buyers are prepared well in advance. The buyers must have passion, the ability to manage the business and the money to buy the business on the owner’s terms.

Several owners I've worked with expected to sell to their partners or staff only to discover that there wasn't enough time or the potential buyers didn't have the resources.

I have also worked with several owners who think they are ready to sell the business but 'get cold feet' because they aren't prepared, emotionally, to move on with their lives. They haven't chosen a next phase of their lives after they make the transition. Making the decisions feels like a dead end or like falling off a cliff. So they hold on too long and their equity diminishes.

For the transition to be successful, the owner must addresses the five questions and develop a comprehensive Transition Strategy well in advance.

My work focuses on these five questions. I begin working with the business owner, helping her or him explore their aspirations and cataloguing the key issues they need to address to plan their transition, Working with the owner, and sometimes their key professional advisors, I help the owner identify he or/his desired results and develop a transition strategy to achieve those results.

In future articles, I’ll discuss various elements of the planning process.

SUCCESSFULLY EXITING YOUR BUSINESS

Seventy five per cent of all business owners regretted selling their business 12 months after the sale! (According to a recent survey by PriceWaterhouseCoopers)

That’s a significant number! Especially for business owners whose life and identity are wrapped up in their business.

The solution is not to hold on to the business. Owners who hold on are in danger of ‘staying when they need to move on,’ dragging the company down.

Staying too long, the business owner ‘loses steam’ and begins to drain the business of its vitality. Instead of being a revenue generator, the business ‘bleeds’ the owner’s investment.

If you are planning an internal sale to your staff, partners etc., staying also limits the opportunity for the next generation to set a new direction - to infuse the company with the creativity and energy it needs to survive and grow.

Seeing diminishing potential for personal opportunity, the best people may leave –  joining your competition.

The solution is for every business owner to envision a ‘Next Phase’ of their life after work and create something to look forward to. This is a very personal challenge – one that takes time and contemplation.

“What will I do next?” You decide! The Owners goal is to explore what beyond their business has personal meaning – to discover their deeper ‘Life Purpose’ and choose that ‘next phase’ of life that builds on that life purpose.


Choosing your ‘Next Phase’ is a challenge! To learn how I can help you, visit my web site 
www.Life-Work-Transitions.com

THREE RETIREMENT STRATEGIES

In my work with business owners, I encounter three strategies for dealing with ‘work-life transitions’ – often called retirement.



The first strategy is to ignore the problem and just keep on working – even after they have lost their ‘edge,’ their passion and their energy. They don’t have an alternate lifestyle to move into so they just keep doing the only thing they know. They stay too long and suck the life out of their business, significantly reducing the value of their equity in the process.


Then, one day, they’ve ‘had it.’ Without much prior planning, they quit – maybe because of poor health or because the business is failing and is no longer sustainable or they just ‘burnout.’ They have no idea what they will do next or what will happen with their business. They sell the business when they have to, instead of when the want to, maybe for ‘pennies on the dollar.’ And the life they are left with is empty, sterile, and directionless. They struggle between meaningless activity and boredom.


There is a second, special kind of people who successfully keep on working: artists, writers, some attorneys and others who work independently, without an organization to support them. Their value is their personal work, not the organization they lead. ‘Living their passion,’ they do it as long as they can, often into their 80s and 90s. For example, Peter Drucker, the prolific management writer (over 30 books) and consultant remained active, albeit in a somewhat diminished role until he died at age 95 in 2005. For him, his work and his passion were one in the same – to work is to live.


The third group follows a different strategy. They plan ahead, thinking ‘transition’ long before the time when they will leave the business. Even while still actively working, they regularly step back from the day to day operation of their business and begin to plan for the next phase of their life. Ultimately, they leave on their own terms.


This third strategy could involve starting a new business, take a new role in their original company or working somewhere else. Or they might work with a cause for which they have a great passion. This life of service gives them great pleasure and satisfaction -– giving them ‘psychic income’ while providing a much needed service. And they have time for personal/family pursuits.


There are several of keys to planning a successful departure from the business:

• Choosing the ‘next phase’ of their life,
• Building a sustainable, saleable business,
• Deciding whether to sell internally, to partners, associates and/or family members, or externally to an outside buyer,
• Fully withdrawing their investment before giving up control.

This whole range of decisions depends upon the owner's personal decision to ‘move on’ with their life and the personal transition strategy he or she develops to make the move. This personal decision becomes the basis for all subsequent decisions.


All this takes time – often several years. So it’s important to start early. Waiting too long can severely limit a person’s options both for himself and for the business.


The moral? Start thinking about the next phase of your life and regularly block out time to make choices about how you will create a meaningful, fulfilling life after your work/life transition.


What is your life strategy? What thought have you given to your future? What will be the next phase of your life – after you transition out of your business? What are you planning for the future of your company after you move on? When is that last time you took time to give this serious consideration? What are you going to take some more time to do it again?


I work with business owners who are contemplating retirement. I can help you. Contact me to explore your options and develop a plan for your future. Call me by April 30 and our first conversation is complimentary.

Retirement Challenges Every Business Owner Must Face

Dilemma: A situation involving a choice between equally unsatisfactory alternatives.

Sooner or later, all business owners will face a time when they need to make decisions about their future – specifically their retirement. They love what they are doing but they recognize that ‘things are changing’ and they have to change, too. They want to stay but know they must step aside. They face two dilemmas.

One dilemma is the choice between staying with the business because they love what they are doing versus holding on for too long and stifling the company’s future, dragging it down, and burning up their personal net worth (retirement income) in the process.

Another dilemma is the choice between selling internally – to family, partners, staff – expecting to leave a legacy versus selling to an outside buyer, generating more retirement income but giving up hope for having an impact on the future of the company.

Resolving both dilemmas depends upon the selling owner making strategic decisions well in advance of the time when he or she must begin execution.

The issues are both personal and business related but the beginning point is personal. The seller’s personal decisions will provide the framework for the business decisions that will follow.

Both dilemmas are difficult to resolve unless the owner is willing to make and execute choices - to look forward, to create a new life that is as equally attractive and potentially satisfying as running the business. I call that “Building a boat to step onto before walking off the dock.”

Over the next several articles, we will look into these two dilemmas and explore strategies for business owners to resolve them – to make their “Grand Transition” into the “Third Phase” of their life.

YOU HAVE TO LET GO TO WIN

A few days ago the Gallup Organization published the results of an eight month survey that showed that business owners have the highest overall well-being of any occupation group – followed closely by Professionals and Managers/Executives.

Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”

In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.

It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.

Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’

The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!

They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.

Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?

Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.

No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’