Second of a two-part series In part one, we discussed the fact that the best time to sell a company often occurs when the owner is least interested in doing so—namely, when business is good and operating the business has become fun.
However, other emotions also surface when a longtime owner contemplates selling a business. One such emotion is what we call "premature seller's" or "seller's" remorse.
Seller's remorse probably has existed since the beginning of commerce. The first caveman who traded his favorite stone axe for a bearskin fur coat undoubtedly later regretted the trade.
Tire dealers experience these feelings, too—no matter what price they receive for their business. It's human nature.
The thought of selling calls forth a flurry of emotions. Pick any of the following that apply.
1) "I have no interests outside the business. One reason for the company's success has been my ability to focus on the business."
Response: Get a life. Go introduce yourself to your friends and family. They may still remember who you are.
2) "I am my business. I'm defined by it. The business is the expression of who I am in the community. I feel I have no value beyond the parameters of this business."
Response: Take a good look in the mirror. Poor you if your self worth doesn't extend beyond the four walls of a retail establishment. Seek counseling from your pastor, rabbi or a shrink immediately.
3) "What about long-time employees? I owe them loyalty and shouldn't sell the business out from under them."
Response: Entrepreneurs have this amazing case of amnesia. Each time an employee leaves for a better deal they feel shocked and betrayed.
However, statistics suggest that eight out of 10 employees would not show up for work tomorrow if they could get a 10-percent increase in pay and benefits elsewhere.
Similarly, another 15 percent would leave to obtain a 20-percent increase in pay and benefits. That leaves somewhere between 1 and 5 percent who are completely loyal to you.
Simple solution: Take 10 percent of what you get for your business and write them checks based on years of service, pay rate or other method you feel is equitable. You should see the expression a $10,000 or $100,000 check puts on most people's faces. (However, tax consequences should be discussed with your accountant beforehand.)
4) "I have customers who are some of my best friends." The personal relationships I have with them are a joy to me. They depend on me. I thrive on serving them."
Response: See the above comments regarding employees—ditto for customers. After the sale of your business, eight out of 10 customers will never ask where you are or anything about you. One in 10 will ask where you are—and be happy with the answer that you are off traveling and spending your money.
I know this will come as a shock to some dealers, but customers' lives really don't revolve around where their cars are serviced.
To help business owners decide whether or not to sell, we sometime suggest they stroll around a cemetery and conduct an imaginary poll of friends and family members buried there. Four questions they should ask are:
1) "How many of you guys have pockets in your caskets filled with money?"
2) "How many wish you had spent just one more year at work and rather than traveling or hanging out with family and friends?"
3) "So where are your customers buying stuff now.|.|.and do you care?"
4) "Where are your employees now.|.|.and do you care?"
If you're a business owner pondering whether or not to sell, ask yourself these two key questions: Is now the time to fold 'em—even if you really don't want to? Or should you stick things out until conditions improve?
Author's disclaimer: This article is not intended as advice. It is for information purposes only. The timing of selling your business is unique, and therefore you should consult your accountant, attorney, and other qualified professionals familiar with your situation before making any decisions.
Mr. Williams is with Hansen & Jennings Consultants in Atlanta.