...are you in this Seller's situation?.
A Compelling Cause - This post describes a situation in which a business owner comes to the immediate realization that they must sell the business NOW. They have dedicated all energy and financial resources to the business and it has provided a good living for them, but something has occurred which trumps all other potential choices. The catalyst may be a health issue, an upcoming balloon payment on a note, the loss of an important customer, or simply age.
Out of Gas - Regardless of age, young or old, the person in this predicament is always exhausted from the struggles of running the business. When the final straw occurs, the need to sell the business becomes the only apparent source of relief.
Out of Time – In diabolical partnership with the lack of energy needed to continue the daily battle of running the company, there is a time constraint looming which creates urgency. You are working against a ticking clock. Talk about stressful!
Tilted Playing Field – Unfortunately this seller finds himself at a disadvantage. A buyer will have a huge advantage if they are aware of any constraints. A certain amount of confidentiality can be maintained through the process, but an astute prospect will quickly ascertain the general circumstances and devise a purchase strategy to put pressure on the seller.
If A) there is no key person to tend to the business while dealing with the crisis, and B) there is a fast approaching time deadline, you will be forced to offer your business at a reduced price.
What are your choices? You will need to be decisive in order to put an action plan in place quickly. The good news is you are an expert at crisis management!
Seek an Advisor – You must find an independent advisor to listen to the problem and be a sounding board for the solution. There is no certain professional or person for this. Trust, judgement and independence are extremely important. You may turn to your spouse, another respected business owner, and possibly a CPA or an attorney.
I’ll bet you raised your eyebrows in surprise at my tepid promotion of seeking advice from a CPA. CPA’s are often quite cautious, even reluctant, in playing this role. By all means, hire a CPA to understand the financial realities of the situation, but unless you have had a long history of working through business issues with your CPA, find another advisor to think through the plan of action.
Professional Marketing – Your most likely scenario is to sell your business and sell it as quickly as possible. You will need to select a business broker who can get you to market and generate a wide audience of appropriate prospective buyers. Should you attempt to sell your business on your own, the time clock will quickly run out, and you most certainly will not maximize the potential value for your business.
Two other potential options are: 1) to develop a key person who is capable of operating the business effectively, which may relieve enough pressure on you to enable you to recharge your energy, and still provide positive cash flow for your living needs, and 2) to approach your bank for an interim solution to the pressing time constraint.
On the other hand, if either of these two options were viable, you fall under the scenario I’ll discuss in the next post: Keeping Pace is Getting Harder. How Much Longer Do You Want to Keep Up the Good Fight?
If you find yourself in this “Out of Gas and Out of Time” category, the time for action is now. Seek out your trusted advisor – and of course, we are happy to support you in the process.