Preface

I took a break. It was a week away from my consulting business where I hoped to get some much-needed rest. I was sitting on the fishing pier in Cocoa Beach, watching the locals cast their lines out into the channel and waving to the sport fishing boats headed off-shore. There was an older man next to me on the pier who had laid his rod down on the ground. It just looked like he wasn’t having a good day.

“Nothing biting today?” I asked.

“Not unless you’ve got one of those hundred-thousand-dollar fishing rigs,” he answered, pointing to one of the fishing boats headed out of the channel towards the blue water. I could feel his pain and offered, “Yeah, but the difference is, when you catch a fish it only costs you for the bait.” “He has to catch a lot of fish just to pay for his gas let alone the cost of the boat.” We talked a little bit and he asked about my job and told me he had recently retired after selling the business he had started thirty years earlier.

The fisherman looked at me and said, “Nope, the difference between them and me is, when he retired he sold his business for enough to pay for the boat, and when I retired I settled for what I could get… and what I got was taken!” I told him I had seen that happen too many times in my work. He continued to talk for quite a while, but his message was, “When I sold my business and retired I had no idea what I was doing… and everyone I dealt with knew how to play the game.” “Now I fish from the pier because I can’t afford the boat.” And then he showed his true level of seller’s remorse.

“I don’t know why I ever sold my business.”

We have all heard stories about entrepreneurs who have taken their chances and, one way or another, made building a business their life’s work. They are the entrepreneurs who become the envy of their friends, family, and employees, none of which seem to understand the effort that went into growing that business. What you don’t always hear however is how that story ends.

Growing a business from the ground up takes courage and skill and the determination to achieve your goals. The life-long goal of most determined entrepreneurs1 is singularly to grow their business. They put all their energy into the day-to-day operation of the business and only pay lip service to the day they may decide to sell that business and move on to something else. They may think about the value of the business they’re building but never actually set a goal to sell their business and cash in on that value. Their story becomes a story without an end. These entrepreneurs are like runners who run the race and are almost to the finish line when they suddenly seem to run out of energy.

“I’ll think about selling my business when I’m ready to retire… I guess.”

Moving on from their business becomes an afterthought many entrepreneurs never really take time to consider… until, for some reason, something brings them to the point where they suddenly decide, now is the time. Now I’m ready to move on.

If you don’t set a goal to maximize the return from the sale of your business and establish a plan that sets aside the time to make that happen, then you may well be deciding to be the guy watching from the pier and not the guy with the boat. The same energy and strategic planning that goes into building your business needs to go into your eventual exit from that business. I recognize a common symptom that an owner is running out of steam. It is when I hear them ask,

“Can we get this sale done in the next six months?”

It’s the wrong question. It says they haven’t been thinking about moving on as a goal to be achieved in the same way they planned the other accomplishments they made in their business. They haven’t taken the time to plan for this event in advance of that day.

Selling a business takes planning and patience. These are the exact opposite of what most small business owners are feeling when they finally decide to move on. Instead they are anxious to get on with life and are now finding themselves blindsided by reality. When you own and rely on a small business, moving on isn’t easy… it’s exhausting, it can be expensive, and it can be frightening because, while a lot depends on the outcome, you’re heading down a path you may not have been down before… or if you have, it may not have been your best experience.

“There is just so much riding on my decision to move on…”

The problem many business owners face is… exiting a business is not what they do. It’s not in their skill set or life experience. Suddenly, after a lifetime of work, they find they are not prepared for one of the most important events of their life. The sale of the business they took so much time to build. So… they find themselves operating without a net (that’s a tightrope parody, not another fish story). If that’s where you are (or are trying to avoid being) it’s time to look around and find a way to make up for your lack of experience selling a business. This book is a good start.

Not all small business owners will find themselves sitting on the pier… some will own the boat and then buy the pier and plan to sell both at a profit. There are small business owners who seem to have the Midas touch and by luck, skill or sheer determination manage to turn their projects into gold. If you’re one of those and you’ve already sold three or four businesses this book may not be for you. Of course, as you read it, you might find yourself having an “Ah-Ha” moment where you find yourself saying “so that’s what was going on.” You might not even have realized at the time that you were being negotiated by a prospective buyer. You made money… but you could have made more. Well now you will know, and hopefully you won’t make the same mistake again. Small business owners tend to learn a lot from trial and error. Unfortunately, failing to maximize the return from the sale of your small business may not be a lesson you can afford to learn the hard way. You need to get this right the first time.

There are also small business owners who started a business for something other than money. Or at least money wasn’t their primary focus. Their goal was to grow a business to support some altruistic purpose. Many businesses fall into this category. The owners’ primary concern isn’t to maximize their return when they sell. Their greater concern may be to preserve their legacy (“I’m not interested in selling if they’re going to change the name”), or to support a religious or political cause (“I only want to sell to someone who believes as I do”), or even to support some method or technology (“I want to sell my business to someone who will continue manufacturing parts for steam engines”).

These are the small business owners who started a business and managed to make a living doing what they loved to do while they were advancing some greater cause, and that cause became their true motivation. My assumption in writing this book is, even if you’re only seeking to find a buyer who is motivated to further advance the same cause you built your business on and maximizing the monetary return from the sale is only your secondary goal, the information provided in this book will assist you in achieving both goals. It really doesn’t matter how you measure your success. Your future now depends on a successful sale.

“We opened our pet shop to help shelter lost dogs and, while we hope to get the most we can from the sale of our business, we want to find a buyer who will continue to support that cause.”

And finally, the reader should recognize that the process used for selling a small business is somewhat fluid and varies over time and under different circumstances. Buyers and sellers adopt and change the activities described here to suit their own needs. Don’t be surprised if you come across someone who does something different than that described here by adding or deleting steps in the process. Be glad you took the time to educate yourself on the process before you entered into it. If someone modifies the sales process, it may be for their own advantage and not yours. And now you will be prepared to defend your own position and needs. Best of luck.

—Jim Grebey