Assumptions, Reality and Critical Decisions
I’ve talked a lot about the emotional impact of deciding to exit the business and how that is likely to color just about every aspect of your personal and professional life. What I haven’t spent a lot of time talking about is the mechanics of turning that decision into reality.
If the decision to back away from the shop is hard, it is exponentially harder to create the list of things that need to be done in order to turn thought into action and make transitioning out of the shop a reality.
That’s especially true, if you care about your business—and care about what happens next to all those likely to be affected.
When you’ve made the decision to exit the business, a series of ripples will begin to radiate out from the center of the pond that is your life—ripples that represent the clear and obvious consequences that will flow out of the decision to sell and all the subsequent decisions to follow. But, among the clear and obvious consequences you encounter and then experience will be another set of consequences to be concerned about: the unforeseen consequences of your decision(s); consequences that are not obvious, not apparent, and, therefore, cannot be predicted.
To ensure you make the “right” decisions, every decision must be predicated on an honest understanding of your current reality: the accurate assessment and understanding of which is critical to everything that follows. Why? Because, every decision that follows will be built on your understanding of that reality and its likely impact on you, your staff, your clients and your community—the community you have spent a lifetime building.
There were certain assumptions I had to make as I considered my choices and then proceeded to share them.
The first assumption is that, like me, you’ve been at this for a while. As I stated in my February column (“Schneider’s Laws,” ratchetandwrench.com/schneiderslaws), no one goes into business to go out of business! To be concerned about exit strategies and succession planning, you need to have been in it for a while to understand how and why you need to get out of it!
Second, despite the emotional debris stream you will certainly find yourself caught up in, the decision to exit the business is based on a rational assessment of the realities you confront daily.
Stress is a killer! Even “good” stress. And we open the doors every morning and invite anyone with an excess of stress in their lives to wander down the driveway and share it with us!
The third assumption: You care—care about everything and everyone associated with your business.
If you didn’t care you wouldn’t invite that stress down the driveway. You wouldn’t do half the things you do or make half the sacrifices you are willing to make so gladly.
And, finally, the fourth assumption: Whether considering an exit strategy or succession plan for your immediate future or one for your distant future, you are thoughtful and deliberate in every decision you make and every action you take.
Why? Because, the individuals that populate your universe—your family, clients and colleagues—deserve nothing less!
Honesty is a good place to start. You need to be brutally honest with yourself and then, subsequently, with everyone else. Selling a business can and will seem more a nightmare than a fairy tale at times!
Be honest with yourself and as honest as you can be with others.
Embrace patience and learn to meditate. You are not going to make the decision to exit the shop one day and hand the keys over to someone else the next. Too many questions. Too many variables. Too much to do in between to protect yourself, your customers, your crew and your potential buyer.
Understand the difference between reality and fantasy. Your business has a finite and easily calculated value. That value will be determined by one of five formulas or the average of all five.
What you “know” (or think) it’s worth is pretty much irrelevant unless you have the time, the money and the patience to “sit” on a sale, and that isn’t the reality most of us will ever face.
You can almost forget about keeping your intention to sell a secret. Secrets are far more difficult in the digital world we all share than you can possibly imagine.
Recognize the choices presented to you. Even if you find yourself in a situation like mine where every one of your doctors insists the only way to mitigate the progression of your disease is to reduce or eliminate stress in your life, there are still choices to be made and ultimately those choices remain yours.
Once you have made the decision to exit the business and have established a realistic value for its sale—one that truly reflects how profitable your business is, and its ability to sustain a new owner and service the debt likely associated with the purchase price—you can begin your quest.
Unless you already have someone in your organization that you have groomed to follow you, your quest will be more difficult and take more time than you think it will.
For a host of reasons, too many of which we are all too aware of already, automotive service businesses are not among the most sought after.
If you don’t have someone already in place to take over the business or purchase the land, choosing the “right” business broker can be challenging. You might have to kiss a lot of frogs before you find the prince or princess of your dreams.
Finding the “right” buyer can be just as difficult. I turned down buyers who met the financial requirements of the purchase, but didn’t have the experience or would not commit to keeping my team together—both incredibly important to me.
This series of columns started with an admonition to ensure your business is as profitable as you can make it to sustain the new owner and service the debt. To increase the valuation and net you more money.
In the next installment, I’ll share how I found my buyer and talk about some of the frogs I had to kiss along the way.