4 Critical Considerations for Preparing to Sell Your Business

“It’s a heck of a lot easier to start a business than it is to sell one.”

— Mark Stroud, Founder of Lamination Services

Mark had not even considered selling his business until his accountant made the recommendation. Frankly, the recommendation shocked him.  As I facilitated the latest discussion in The Succession Planning Roundtable series, Mark Stroud spoke candidly about what selling a business is really like for an owner.  I felt compelled to climb on the roof with a bullhorn and shout out his insight for all business owners to hear:

• “The fact that I didn’t have to sell made all the difference. This wasn’t a fire sale.”
• “Have a succession plan in place first, then choose when to implement it.”
• “Be clear on what your specialty is. Usually it’s running your business, not selling it. I had to start getting my feet wet with the sales process and make a bunch of mistakes before I realized I better get some help.”

The advice I heard from Mark:

1. Get counsel from trusted advisors who can help you start the process.
2. Ensure support from your spouse and your family.
3. Keep great records. Run a clean business. It gives a lot of legitimacy and a great core to build from.
4. Don’t wait until it’s too late and you are forced into a fire sale.

If you are thinking of selling your business and don’t know where to start, simply start at the top:

Have a confidential conversation with a trusted advisor whose advice you can depend on. It would be an honor to hear from you… 

abby@leadershiplegacygroup.com

Admit it…it’s Emotional

Over the years I have worked with many clients as they make the transition to selling their business.

One thing has become very clear: It’s emotional. But nobody wants to admit that.

Emotions are messy and we often view them as a weakness.  We all have emotions and being in touch with them is a strength. Dismissing them, sadly, does not make them go away.

I have seen client after client struggle to maintain the illusion that they are not mentally ready for such a tremendous change.

Mental readiness is a matter of the brain.

Emotional readiness is a matter of the heart.

The heart gets such a bad rap when it comes to business language. It is time we give credit where credit is due. The heart is where dreams originate, and where the courage to follow those dreams is manufactured.

Someone faced with selling their business is someone who followed a dream. Someone who had the courage and tenacity to turn that dream into a reality. It only makes sense that the very place the dream originated will struggle with letting go.

Create a Company Survival Guide for Your Heirs

What if something happened to you and you were no longer able to run your business?

At breakfast last week, Charlie Witzke, CFO at Ecoflow in Greensboro, NC, made a powerful point about the need for a basic Company Survival Guide for Heirs of business owners. I asked him to share some of his thoughts with me, and with his permission, I share them with you!

What I like about this guide is that it was put together from the perspective of a business leader in the business. Your CPA, Risk/Insurance agent, Banker, Business Attorney and Estate Planning Attorney also should weigh in on this list.  They will undoubtedly have additional tax, financial and legal components or nuances that are important in your particular situation.

This Company Survival Guide for Heirs offers a good conversation starter with each of your advisors.

If you were no longer in a position to run your business, and your heirs are not active in the business, here are the ten key pieces of information to have readily available:

1. Contact information for your lawyers, accountant, banker and risk/insurance agent
2. An identified interim leader who is designated to run the business in your absence
3. “Executive summary” of the business. (This will give your heirs an overview of the business as well as a starting point for an Offer Memo should they decide to sell)
4. Where to find the most recent annual and interim financial statements
5. Where to find the latest “Plans” such as the annual budget, a 3-year work plan or a long term strategy document
6. List of top customers and key suppliers
7. Key product and / or service initiatives
8. Legal contracts that are important to the business
9. Potential acquirers if your successor(s) had to sell or chose to explore selling the business
10. List of what is keeping you up at night? This will let your interim leader know where the skeletons in the closet are hiding

What pieces of information would you add to this  Company Survival Guide?