Connect with us

Business Entrepreneur

How to stay in your business after you sell

When it comes time to sell your business, no matter your motivation, you may not be ready to leave, so prepare appropriately, and you won’t have to!

Published

on

business meeting

business meeting

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.

The takeaway

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.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Entrepreneur

Is the best time to relocate your business before, during, or after the holidays?

(ENTREPRENEUR NEWS) If your business has outgrown its current space, it may feel like there’s never a good time to relocate. When can you pack everything up without disrupting operations, going offline, and sinking your sales?

Published

on

relocate fedex

If your business has outgrown its current space, it may feel like there’s never a good time to relocate. When can you pack everything up without disrupting operations, going offline, and sinking your sales? The answer may be during that post-holiday slump.

Though the holiday season is marked by increased shopping and general economic activity during the run-up, once the holiday season actually begins, we tend to see a slowdown that leads to low first quarter profits. Decreased profits during this period don’t mean we’re looking at an overall economic slump, but rather that everyone is recuperating from holiday spending sprees, while companies assess and prepare to launch their start-of-year marketing strategies. It’s a time of renewal and reconsideration, from an economic perspective.

If you’re thinking about staging a move for your business this holiday season, you’re on track for decreased business disruptions, but that doesn’t mean you have an easy road ahead of you. Here’s what you need to know to execute the move smoothly.

Have A loose timeline

One of the most challenging things about planning a business move is that it can be hard to predict how long it will take to properly execute your move. That means, even if you tell your customers you’re relocating, you shouldn’t expect to give them a hard re-opening date. Rather, the length of time it takes to move tends to hinge on a number of factors, including distance, size of your business, infrastructure issues, and regulatory concerns, not all of which are easily predictable.

You’ll also want to leave some buffer time when planning your move because you can’t predict problems that might arise with the moving company. Bad weather or a broken down truck can delay a move, especially if you’re working with a small company. Moving companies may also offer you a lower rate if you’re flexible with your move dates.

Consider your employees

Another question you’ll want to ask before moving is, “Where are my employees in all this?” Some companies firmly believe in giving employees holidays off, even if it means closing a profitable business like a restaurant during an otherwise profitable time. Other companies, however, typically assume employees will be in the office during or immediately after major holidays.

Regardless of your usual philosophy, you need to determine what role your employees will play in your move.

While they shouldn’t be responsible for the physical process of moving, do you expect them to participate in packing and setting up the new location? You should be clear about your expectations while recognizing that moving is outside the scope of typical job duties. You also will need to budget to pay your employees during this downtime while also financing the move, even though you won’t be bringing in a profit.

Mind the locals

If you’re primarily an online business, you may not have to worry about how your move will impact customers – other than some downtime, these individuals will be minimally affected. However, for businesses that run a brick and mortar storefront, changing locations can have implications for your community relationships.

If you move outside your original area, for example, you may lose customer goodwill or even sacrifice some of your customer base altogether. Depending on the service you provide, they may come back, or they may find another option closer to home.

The holidays are a busy time in general, but they’re an unusual time for businesses since economically it’s the pre-holiday period that’s actually the most hectic. Take advantage of this imbalance to move your business with the least fuss during the last few days of the year or at the start of the first quarter. You’ll be pleased to find how smoothly a company move goes when customers are otherwise occupied.

Continue Reading

Business Entrepreneur

Hobby to profession: The new-age entrepreneurs

(ENTREPRENEURS) Turning your hobby into a career is harder said than done but a few knitters are putting on a clinic on how to do it.

Published

on

knitting entrepreneurs

I’ve often heard the advice that you should follow your passion, and eventually, someone will pay you to do it. But the truth is, turning your hobby into a career is easier said than done. The process by which a person turns a hobby into a business is poorly understood by experts – at least partially because it’s so difficult to collect data on this topic. In order to separate the lifelong hobbyists from the entrepreneurs, you’d have to trace the activities of many hobbyists over many years to understand how their paths diverged.

An MIT Ph.D. candidate has hit upon a novel way to research the transition from hobby to entrepreneurship by following Ravelry.com, a social media and pattern-sharing platform for knitters and crocheters, often known as the “Facebook of knitting.” The site encourages crafters to keep track of and share their projects, tools, techniques, and patterns.

The Washington Post reports that by analyzing over 400,000 profiles on Ravelry.com and interviewing 100 knitters, found through an additional newsletter and three blogs, Ph.D. candidate Hyejun Kim was able to draw some interesting conclusions about what can “cause someone to flip the switch from ‘fun’ to ‘profit.’” Only 1.5 percent of Ravelry users become entrepreneurs who sell their own patterns, knitted items, or yarns. What sets this small number of knitters apart?

Although the internet provided the crucial data Kim needed for the study, it was, in fact, real-world connections and encouragement that turned out to be the tipping point into entrepreneurship for most knitters-turned-business-owners. When asked why they decided to start their own businesses, most reported that they were encouraged by their friends and spouses.

Most of the crafters who became entrepreneurs were already very skilled knitters, to begin with. Kim was able to isolate a number of knitters who joined in-person knitting groups like Stich ‘n’ Bitch. Those who joined a group were 25 percent more likely to become entrepreneurs than those who didn’t. That’s because their crocheting comrades would compliment their creations, boosting their confidence and inspiring them to take it to the next level.

It shouldn’t be overlooked that 96 percent of Ravelry users are women. The forces of sexism in the world of startups and the undervaluation and domestication of women’s handicrafts likely combine to give women the impression that their skills and talents are just for fun and shouldn’t be seen as an opportunity to make money. Kim’s research shows that when it comes to entrepreneurship, sometimes talented women just need a nudge in the right direction.

Continue Reading

Business Entrepreneur

How to effectively share negative thoughts with your business partner

(BUSINESS) You and your business partner(s) are in a close relationship, and just like a marriage, negative emotions may play a role in the relationship.

Published

on

share feedback

You and your business partner are in a relationship. Your business was born when you shared a common vision of the future and became giddy from the prospect of all you could do together that you couldn’t do alone. Now, you spend much of the day doing things together in collaboration. The stakes are high; there are obstacles to overcome, decisions to make together, deadlines to meet, and all the stresses of running a business.

It’s no wonder a business partnership can often be just as complicated and emotional as a romantic relationship. If you are struggling with your business partner, you might find helpful advice in resources originally targeted towards troubled couples.

Relationship expert Dr. Jeffrey Bernstein has explored how to share “toxic thoughts” with your partner. In a linked article, Bernstein describes toxic thoughts as distortions of the truth that cause us to overemphasize the negative attributes of our partner.

Some examples of toxic thoughts include blaming your partner for larger problems that aren’t really their fault, inaccurately assuming your partners intentions, or resenting your partner for not intuiting your needs, even if you haven’t expressed them. The defining characteristic of these toxic thoughts is that, although they may be based in the truth, they are generally exaggerations of reality, reflecting our own stresses and insecurities.

Just as much as in a love relationship, these toxic thoughts could easily strain a business partnership. If you find yourself having toxic thoughts about your business partner, you will need to decide whether to hold your tongue, or have a potentially difficult conversation. Even when we remain quiet about our frustrations, they are easily felt in the awkward atmosphere of interpersonal tension and passive aggressive slights that results.

Dr. Bernstein points out that being honest about your toxic thoughts with your partner can help increase understanding and intimacy. It also gives your partner a chance to share their toxic thoughts with you, so you’d better be ready to take what you dish out. It might be hard to talk about our frustrations with each other so candidly, but it might also be the most straightforward way to resolve them.

Then again, Bernstein points out, some people prefer to work through their toxic thoughts alone. By his own definition, toxic thoughts are unfair exaggerations of and assumptions about our partner’s behavior. If you find yourself jumping to conclusions, assuming the worst, or blaming your partner for imagined catastrophes, perhaps you’d better take a few minutes to calm down and consider whether or not it’s worth picking a fight about. Then again, if you’re self-aware enough to realize that you are exaggerating the truth, you can probably also tease out the real roots of any tension you’ve been experiencing with your business partner.

If you are going to get personal, shoulder your own emotional baggage and try to approach your partner with equal parts honesty and diplomacy. Avoid insults, stay optimistic, and focus on solutions. State your own feelings and ask questions, rather than airing your assumptions about their intentions or behaviors. Keep your toxic thoughts to yourself, and work towards adjusting the behaviors that are making you feel negatively towards each other. Your business might depend on it.

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!