“You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.” – Samuel Levenson
In a previous post, I told the story of selling the first business I built. I was 35, burned out, and miserable. I took the first (and only) offer I got, and in the process, left money on the table and put myself at tremendous risk.
Here are some more things I did wrong as a seller.
- I had no plan and no goals. I waited until I was so unhappy that the decision to sell was almost a snap decision. I didn’t think through how timing or other factors might affect the value of my company, and I didn’t have the skills to understand the true value of the business. I was young, and I figured I had lots of years to recover or start over if I didn’t get the amount I wanted from the sale. I was right about both of those, but most buyers I work with now don’t have the same luxury. If you make a bad deal at 60 or 70 years old, you don’t have time to recover or start over.
- I let emotion be the governing factor in how I sold the business. I was miserable, and wanted out so badly that I had no energy to negotiate or wait for the right time and terms. I was lucky that my buyer didn’t take advantage of that. If he was planning to swindle me, I wouldn’t have seen it coming. I trusted my instincts and didn’t have anyone advising me. I’m a business broker today in part because I don’t want to see other owners work hard all their lives only to make bad decisions about how and to whom they sell their company when they retire.
And it’s easy to make bad decisions. I was so burned out that after I sold that I let my Series 7 license lapse. “I’m never going to need this again” was my reasoning. If my buyer had defaulted on our agreement, I could not have taken the business back and operated it. I had no protection against the deal falling apart, either in the contract or in my contingency planning.
- I went it alone. What I didn’t know about selling a business could fill an entire library. If I had had good advice from an experienced broker, I would have made a lot more money. I slept pretty well before and after the sale, but if I’d known how vulnerable I was and how many things could have gone wrong that didn’t, I might never have slept at all.
I started, grew, and sold many businesses after that first one, including an HVAC company I sold to my son. I learned from my mistakes; I became able to view the companies I sold objectively, and as a consequence, I made better deals and more money each time.
Two meetings changed the course of my career. The first was with a guy who owned a charter fishing business. When I asked him how it felt to have fun making money, he said “This isn’t really where I make money. I own a pool cleaning business that I work two days a week. That’s what pays the bills; this is mostly for fun.” It was a revelation to me: that there was another way to earn a good living besides working six days a week in your company.
The second meeting was with a business broker at a conference. I didn’t know what they did, but when the broker explained his work to me, I was amazed. I’d done all those things for myself over the past decades: valuing my companies, finding buyers, figuring out if they were qualified, negotiating deals, writing contracts that protected me as a seller. Who knew you could make money doing that for other people? All it takes is a real estate license and a sincere desire to help business owners get the best deal they can.
Today, after years in the business, I end every one of my videos with an invitation to call me if you have a question about selling your business. It’s not a sales pitch; I mean it. I love what I do, and a big part of that is helping owners avoid the mistakes I’ve made over the years.
Most sellers are selling a business for the first time, and it’s an emotional experience. It’s not just a business deal; it’s their identity, their life, they’re selling. I’ve been there and felt the exact same mix of emotions. I think it’s what makes me good at what I do. None of us should have to go it alone when there are professionals willing to help.
So I mean it. If you have a question about when, how, or even if you should sell your business, give me a call.