Accomplishing the goal of selling your business
Some entrepreneurs launch a business to bring their talents to bare, to achieve their dream of serving a specific type of client in a specific way, never considering selling their business, but many are acutely aware that their business may someday be worth selling. When your business is humming, your management team is strong, and your metrics can describe the value in your business, it may be time to sell. But that doesn’t mean you have to leave your company.
Charlie Brock is chairman of the board at FourBridges Capital, a Tennessee-based investment-banking firm that focuses on advising Southeastern middle market businesses. Charlie is also CEO of Launch Tennessee, a public-private partnership focused on supporting the development of high-growth companies in the state of Tennessee with the ultimate goal of fostering job creation and economic growth.
He notes that it is true that when you sell your business, you aren’t necessarily destined to get the boot or sail off into the sunset – there are ways to actually stay put after you sell.
Brock says, “Define your motives. For many business owners, selling a company is a once-in-a-lifetime event. You’ll make the best decisions for you and your team if you understand exactly what’s driving you to sell. Work backwards: ask yourself what you hope to have and where you want to be after hands shake and the deal closes.”
If you envision your role continuing after you sell, Brock says you’re likely motivated by financial security, noting that “Maybe you enjoy operating and growing your company, but you feel the need to de-risk your financial portfolio and remove your name from the company’s debt.” The second reason many want to stick around is that it is your career calling. “If you built a company around something you’re passionate about, you might find that you prefer working in the business rather than on it,” Brock adds.
Paving the way to sticking around
In his own words, Brock offers the following tips to staying in your business after you sell:
Motives can help determine the best transaction strategy and course of action. Be honest with yourself – and your advisors – about your reasons for selling, so that you can achieve the outcome you’re seeking.
Know your type and market appropriately. Once you know why you’re pursuing a transaction, it’s important to attract the right kind of buyer.
For owners looking to de-risk their portfolios, a financial buyer (i.e., private equity group) may be the best option. If you go this route, you’ll sell a percentage of your interest and give up some amount of control. Typically, a deal will be structured so that you’ll still have skin in the game, and you’ll probably be expected to continue operating the business for a period of time.
On the other hand, if you want to stop running the business and start working within it, market to a strategic partner who has some experience in your industry and/or a desire to expand into it. Most likely, your ideal buyer will want to keep you on board because of your market connections, your closeness to the company, and your industry competence.
Label yourself. If you’ve identified a potential buyer, define your post-transaction role early in the process. Know the exact nature of your future responsibilities and reporting relationships.
It’s not unusual to shy away from this part of the conversation: it can be hard to advocate for yourself, and many owners worry that they’ll scare away their buyers. While keeping quiet could make for smooth sailing in the short term, you’re simply delaying the inevitable – and setting the stage for bigger battles down the line.
It’s best to make your non-negotiables and deal-breakers clear from the start. Here again, having an advisor is invaluable: it allows for some “good cop/bad cop” role playing, and it adds a much-needed third-party perspective during negotiations, which can be difficult and emotionally charged.
Don’t get halfway down the aisle before you realize a marriage isn’t in the cards. Be open about your ideal role, and find out whether it aligns with your potential buyer’s expectations. And if it doesn’t? There are other fish in the sea.
Recruit the experts. It’s important to lean on experts throughout every step of the deal process. But when you start finalizing terms, experts become a necessity.
Is your understanding of your future role actually reflected somewhere in the lengthy, complex and legally binding documents that you’re about to sign? An investment banker and an experienced M&A attorney can ensure that the terms you think you’re agreeing to are, in fact, buried in the legalese. Your advisors know what to look for, and more importantly, how to spot red flags. And assuming you’ve shared your motives with them (see #1), they can alert you when they come across something that doesn’t suit your fancy.
Check your ego at the door. If you’ve been the top dog at your business since its inception, prepare for a change: it’s a completely different ballgame after the money changes hands. Even if you’re positioned as CEO post-sale, someone else’s finances and decisions will be in play.
The transition can be challenging and emotional. Should you choose to sell and stay, remember why you’re doing it – and what you’re getting out of the deal. Chances are, if you pursue a transaction based on sound reasoning and expert advice, the benefits will outweigh the trade-offs.
Brock advises that whether motivated financially or by your passions, you have the power to prepare a scenario where you remain involved long after your company sells.
Here’s why you shouldn’t start a startup
(BUSINESS ENTREPRENEUR) Building your own startup and being your own boss sounds tempting, but be sure you make these considerations before starting out.
2020, a year for our generation that will most likely be marked in infamy for decades to come. At least I hope that this is the bottom of the barrel, because if there’s even further to go… Those fallout shelters are starting to look homey.
A lot of people, myself included, are looking for different options for new careers. Maybe it’s time to place some faith in those back-burner dreams that no one ever really thought would come to fruition. But there are some things about starting up a new business that we should all really keep in mind.
While you can find any number of lists to help you to get things going, here’s a short list that makes beginning a new business venture a monumental effort:
- You need to have a unique idea with an impeccable execution. Ideas are a dime a dozen. But even the goods ones need the right business-minded person behind it to get things going for them.
- Time, time, and more time. To get a startup to a point where it is sustainable and giving you back something that is worthwhile, takes years. Each of those years will take many decisions that you can only hope will pan out. There is no quick cash except for a lottery and you have to be extra lucky for those to get you anything. This whole idea will take years of your life away and it may end in failure no matter what you do.
- You have to have the stamina. Most data will show you that startups fail 90% of the time. The majority of those are because people gave up on the idea. You have to push and keep pushing or you’ll never get there yourself. Losing determination is the death of any business venture.
- Risk is a lifestyle. To get anywhere in life you have to risk something. Starting a business is all about risking your time and maybe your money to get a new life set up. If you can’t take risks for the future then you can’t move up in the business world.
- Bad timing and/or a bad market. If you don’t have a sense for the market around you, which takes time and experience (or a lot of luck), you won’t make it. A keen business sense is absolutely necessary for you to succeed in a startup. Take some time and truly analyze yourself and your idea before trying something.
- Adaptability is also a necessity. The business world can be changed at the drop of a hat, with absolutely no warning. Rolling with the punches is something you have to do or every little change is going to emotionally take a toll on you.
- Lastly, not all of this depends upon your actions. If you start something that relies on investors, you’re likely going to get told “no” so many times that you’ll feel like it’s on repeat. Not everything is dependent upon your beliefs and whims. You need to be able to adjust to this and get people to see things from your point of view as well. But ultimately, it’s not all about you, it’s also about them.
These are just a few ways that starting a startup could stress you out. So, while the future could be bright, stay cautious and think twice before making any life changing decisions.
Restaurants: Going digital is simple with these tools
(BUSINESS ENTREPRENEUR) In 2020, restaurants going digital is critical. Luckily, it’s also easy, safe, and may even save you money.
So, you own or manage a restaurant and you have yet to “digitize” your menu for COVID-era safe ordering? No problem! Transitioning your menu and service to the virtual realm has never been easier. There are a ton of options for restaurants to choose from to keep your customers feeling at-ease, your front-of-house staff happy, and the whole service experience streamlined for all parties involved.
A free app with over 500 restaurant partners and 5k+ active users, AAHI is a user-friendly platform that uses QR codes to share menus and NFC for contactless payments. AAHI boasts a 25% order increase for participating restaurants and who can say no to that, especially during these tough times. Additionally, you’ll be cutting down on operational costs by around 30% (better tech equals less need for servers!), and your laid-off staff will be able to collect unemployment if they need to.
Another free (up to 200 views a month) app with an emphasis on curbside pick-up is Orderlina. Customers scan a QR code, which takes them to the same menu they would see if they were going to eat in, making it an integrated experience. A bonus is that the app links your menu to your social channels. I always say, free marketing is never a bad thing! Plus, you’ll be more likely to gain followers and receive micro-content from satisfied customers. Win-win!
Especially with winter right around the corner and outdoor seating becoming an increasingly limited option (especially depending on where you live), everyone in the industry is eventually going to have to make the shift to digital – the question is when. Physical menus have become a thing of the past. Not only are they potential vessels for spreading COVID-19, but if you are using disposable paper ones, you’re undoubtedly creating unneeded waste. Same goes for the exchange of cash, or card payments that require contact. Good riddance!
The common goal across the entire industry right now is to stay open and bring in capital in whatever capacity possible, while also maintaining a healthy staff and a pleasurable, safe experience for patrons. That’s going to require some adjustment and creativity compared to service pre-COVID. By converting to digital, you are putting your best foot forward into the uncertain future for the restaurant industry.
Scientifically check your risk for burnout with this free quiz
(BUSINESS ENTREPRENEUR) This new tool lets you take a free self-assessed, science-based burnout test to give you an idea of how much self-care you need.
Concerns of keeping self-care and mental health in a positive spot – specifically in relation to burnout – have been a hot topic of discussion. While COVID-19 has exacerbated these concerns and stress levels, the issue of burnout has been around for quite some time.
Work burnout is often discussed within terms of work-life balance. Simple ways to avoid that crash are enforcing a hard stop on reading or responding to emails at a certain time of evening, or to continuously clean your workspace. Easier said than done, but it is critical.
But sometimes you have to look at the nitty gritty. Sometimes you have to ask difficult questions about your job and your personality in order to understand how burnout is impacting you. This can now be done with Global IT Burnout Index, a free, science-based assessment to tackle your stressors before it’s too late.
This is geared towards people working in tech (as the website reads, “burnout in tech is high and real”), but is useful for any industry.
To begin, you simply start the quiz and answer a few questions about yourself and your job (e.g. “I find it difficult to relax after a day of work” and then you answer based on how strongly you agree or disagree).
There are 10 total questions, and no personal information is asked (no name or email). It is open data, meaning it will help people on the other side better understand burnout; but, it’s totally anonymous.
The quiz takes no longer than 2 minutes. At the end, it will give you a number out of 6 measuring your burnout rate. The higher the number, the more likely you are to experience burnout.
Burnout has the ability to manifest physically and mentally, and can take a toll on your body and mind. Knowing if you’re experiencing high amounts of activity that can lead to burnout can help you know if you need to take precautions to change things in your life or job.
For those of us working from home, the situation is a Catch-22. You aren’t currently forced into a stressful commute. But it’s harder to pull yourself away when 5pm (or whatever your end time is) rolls around.
For people in the office or on site, it’s the same thing. You get to socialize (safely, obvi) with your coworkers, but there’s those on-site pressures.
No situation is perfect, but understanding if you’re in a situation where you could use a change or some help is incredibly important – especially these days.
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