Photo by Tima Miroshnichenko
We recently had the chance to visit with one of our clients who sold a business with us and asked her what she learned on her journey that she would want to pass on to those who are looking to sell their business. For purposes of confidentiality, we will call her Rachel.
Mentoring Matters
Rachel was a member of the Helzberg Entrepreneurial Mentoring Program (HEMP). “It’s a wonderful program, but it’s not for everyone.” When we asked what she meant, she noted that many people who were interested in the program were not mentorable. She gave four qualities of the mentorable:
- A willingness to look at the ugly and harsh realities of your business, including failures.
- An ability not to be too defensive, i.e. don’t take the criticism personally.
- A desire to dig in and get real about what has to be done to make your business better.
- Checking your ego at the door: it’s okay if you don’t know something; ask for help. Be willing to trust, especially when surrounded by people who are volunteering their time to help you and your business.
Because of the prestige of the program, Rachel said that people often saw HEMP as an exciting networking opportunity rather than a way to take your business to the next level. Those people didn’t last.
Lesson: Get mentorship. If you can’t find a mentor in your immediate circle or don’t yet qualify for HEMP, consider SCORE.
Advisors Make the Difference
“I never really considered selling the business on my own (FSBO),” said Rachel. “I was busy running my business.” Rachel went on to share her own reasons for staying focused on her business and hiring an Apex advisor to help her sell:
- Selling a business is a full-time job… there was no room in her schedule to take on that project.
- She wasn’t qualified to sell a business…she had never done that before…why risk getting anything wrong on such an important transaction?
- You don’t know how long it will take to sell a business, and it’s better to let someone else work on that while you keep the asset — the business — running like clockwork
Lesson: You may be an expert on your business, but that doesn’t make you an expert on selling your business. Ask for help, and it will be well worth whatever it might cost.
Know Your Buyer
“A lot of people don’t actually understand how to read financials,” Rachel shared. “There’s no substitute for knowing your business and knowing how your numbers work, because often enough you may have to explain points that seem obvious to buyers who don’t (yet) know their way around your business.”
We have often had to guide potential buyers through financials and the mechanics of the business, but Rachel repeated back a lesson we had instilled in her, and is a classic negotiation tactic: don’t answer questions you’re not asked. In this particular case, there was a particular type of liability on the books that the seller had explanations for, as well as strategies in which any potential downside could be mitigated. But the buyer never asked about it, so she never brought it up.
Lesson: your job as a seller is not to provide a business boot camp or a clinic on reading financial to a buyer. Your job is to represent your business as completely and honestly as possible. You can’t anticipate every question or scenario, only the ones you are asked about, so prepare for everything you could be asked for, so that it will reassure buyers who occasionally do dig deeper.
Final Thoughts
It’s interesting that two of the areas that Rachel discussed involved asking for help. Too often, we can be afraid or ashamed to ask for help. But nobody builds, buys, or sells a business alone. So why not choose the help that will get you to the finish line, whether that’s in mentorship in the years before you are ready to sell, or at the time you are ready to sell? Help is the difference between selling your business and not selling it, and it’s the difference between getting what it’s worth and anything less than that.
Ready to get some help selling your business? Reach out today.