How Do You Create Competitive Tension?
If you have been through the process of thinking about who might buy your business and, if you do market your business proactively and you invite offers, you might be surprised with the number of offers that you get.
You create a mini auction, basically. You can do that. You can actually create it. You definitely need to have your broker involved in that. A third party must be involved in that whole negotiation process with you to make it so that you are in an arm’s length because you would become too emotionally involved. That always happens. It doesn’t matter who you are.
The process is actually quite similar to selling your home. The emotion that’s there is incredible. It really is. Your business is your baby, just as your home is your castle.
The emotion that has actually caught up, that is driving you, can often cloud your thinking. Sometimes business owners can have inflated views, but hopefully they will get past them, to be at a realistic level.
It’s just the emotion that you do get caught up in. Selling a business is very difficult and that it is your identity. You’ve been wrapped up in it. All of a sudden, ultimately when it’s gone there’s almost like a grieving process that the people go through. Notwithstanding for some, “It’s thank goodness it’s over. I’m past it.”
For most, they have often started from scratch and really built it and that’s been their lives, you know?
There’s a fascinating story about Richard Branson, in his days of growing, when he had to sell Virgin Music to Sony. He needed the money desperately. He talks about when he is walking down the street, he has a check for a billion dollars in his hands and he’s crying. He is literally crying. He’s sobbing because it’s something he grew from nothing, even though he’s got this check for a billion dollars that he really needed.
His whole identity had just been sold off. You find, you might be out socially and someone says to you, “What are you doing now? What are you doing with yourself?”
You know, when people do sell their businesses and particularly when you do get a very big payday, one thing I would highly recommend to do is take some time to decompress. That’s a really useful word, “decompress”. Because you are so stressed and sometimes it takes months to get over that.
Then have something to do. Have something else useful to do because a life without purpose is no life. You have to have another purpose in your life. That could be a whole range of different things. You might want to get involved in the community. I have been involved in our local community sports club for 20 years.
Those are things that you enjoy. You might want to do some volunteer work. You might want to put back into the community in different ways. You might actually want to go out and mentor and be an adviser for other people who are actually in their businesses.
You know, one of the other strategies for selling your business is, in fact to have a form of vendor finance, where you might bring in someone else who is going to buy the business, but you might mentor them in your own business. This can be hard too, because you have been calling in the shots.
So, you could mentor the next person to someone who wants to buy the business, that right person but they don’t just have the money and you are going to say, “You are going to pay me, let’s just say it’s a $100,000 a year for the next five years and I’ll help you in that transition.”
There is also something called a “management buy-out”. That is, in fact, what I did when I bought the freight business from Mayne Nickless. It was a management buy-out.
You put a syndicate together. It could include staff, management and external investors as well. Basically, the business is bought from within. And it may mean that you leave some money in the business like I did when I was with Mayne Nickless, way back when. You leave some money in the business and then it gets paid back to you over time.
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