Being Purchased vs. Selling Out
For many owners, a business feels like a child, which makes the idea of selling emotionally difficult. This Building Value episode suggests reframing a sale as being purchased, where a buyer adds value for employees and clients rather than taking something away, and explains how documenting procedures, diversifying revenue, and planning for employees prepares a business for a stronger outcome.
For many owners, a business feels like a child, which makes the idea of selling emotionally difficult. This Building Value episode suggests reframing a sale as being purchased, where a buyer adds value for employees and clients rather than taking something away, and explains how documenting procedures, diversifying revenue, and planning for employees prepares a business for a stronger outcome.
Key takeaways
- Selling a business can feel like selling out because it often represents a large part of an owner's identity, not just a financial asset.
- Reframing a sale as being purchased, rather than selling out, can shift the focus toward the value a buyer adds for employees and clients.
- Preparing for a stronger outcome can mean cleaning up books and records, documenting operating procedures, and moving from handshake deals to formal contracts.
- Diversifying a client, supplier, or revenue base, and planning for how employees will be treated, are simply good business practices, whether or not an exit is on the horizon.
Hello everyone and welcome to this month's edition of Building Value. For most every business owner, the idea of selling ever can be a difficult one. After all, not only is your business often your biggest asset, but often it's also the thing that you spend the most time thinking about in the world, second perhaps to your family: the problems that keep you up at night, the solutions that have you jumping out of bed in the morning, and the emotions that go along with all of it. It's an absolute roller coaster. Frankly, it's probably the closest thing to being a parent that one can be. And your business truly feels like your child. And in a lot of ways, it is.
That's why it can feel so difficult to sell your business. After all, we're talking about your life, your identity. You're selling a very large part of who you are. And along with that comes plenty of questions and concerns. What is going to happen to your people? What is going to happen to your clients? What is going to happen to your business?
During moments like this, difficult decisions and difficult mental roadblocks, I always try to reframe the situation through inversion, that is, flipping the paradigm 180 degrees. Instead of selling your business, which can frankly feel like selling out, what if you viewed it as being purchased instead? Instead of viewing it as something as a net negative for your people or your clients, what if you viewed a potential suitor as someone who is adding value to your current business, taking it to a level that you could not have taken it to on your own, and therefore providing more and better employment opportunities for your people and/or a better, more robust service offering for your clients?
How would you prepare differently? What would you be doing today to best position yourself, your employees, your clients, and your business for a more optimal outcome? Would that mean cleaning up your books and records or documenting your operating procedures? Or would it mean moving away from handshake deals and working toward more buttoned-up contracts? Or working to diversify your client, supplier, or revenue bases? Or does that simply mean beginning to think proactively about something you can create contractually for your employees to ensure that they are well taken care of, either financially or through employment opportunities, as part of any transaction and transition?
To me, as always, a lot of these things aren't simply important because you may or may not be working toward an exit. It's more so because they are the practices of any great business. So, don't let yourself get distracted by the emotional side of things. Stay focused. Run a great business. Get a little better every day, but be ready when the time comes. Because after all, it isn't you selling or selling out. It's you being purchased, which makes all the difference. Thanks for joining me everyone. Until next month, keep building value.
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