Buying a business is tough! Selling your business is tougher!

As you may know from my newsletter, I’m a trend person. I love reading about demographic trends and the impact on our culture. So reading about the coming tsunami, as the first of the baby boomers turn 68 and the last boomers reach the milestone half century, it’s like being in a candy store for me! What does this have to do with buying or selling your business? Well, I’ve been doing a lot of research on how those trends matter in the business world, and what I’ve found is that six (6) to eight (8) million businesses will change hands in the next 9 years as boomer owners exit their business. How they exit their business is where it gets really interesting. According to John Leonetti,  author of: Exiting Your Business, Protecting Your Wealth :A Strategic Guide for Owners and their Advisor, seventy-five percent (75%) of business owners want to sell their business, but only 20% actually sell. The implications of this are grave for many boomer owners because the majority of their net worth is tied up in their business, and thus, the majority of their retirement funding, too.

Barriers to a sale

What to do? Well, you can begin with a business valuation, to get a sense of what your business is actually worth…not what you hope it’s worth.  In a recent Wall Street Journal article ‘Stick Around After the Deal’, by Lisa Ward, one of the biggest barriers to selling your business is finding a buyer with the ability to get financing.  Most buyers don’t have a wad of cash sitting around waiting on the purchase of your business.

So now what? Seller financing! Yep! That’s you. You are the bank, providing the loan and the buyer pays you back over time. Sure, there are risks with that, but according to a BizBuySell.com  survey, ‘over 90% of business brokers consider seller financing to be either critical or important for getting a deal done’. Ward goes on to say, ‘In this economic climate, sellers willing to finance the sale can often get a faster sale and a better price than they would have gotten if they waited for a well-funded buyer’.

The advantages of seller financing? Rather than liquidating it, or disposing of it in a fire sale, you get to sell your business, for money! In addition, you may want the opportunity to stay engaged in the business, in some capacity. This option can provide that to you as a standard part of the contract.  And, if the buyer defaults on your loan, you can activate your loan agreement default clause, returning the business to you without going through a lengthy and expensive court battle. The only problem with that is…you get the business back! If you wanted the business back, you probably wouldn’t have tried to sell it in the first place!

Don’t Get Derailed

What that means is …  if you are going to seller finance, you are really making an investment in your buyer. You are counting on his or her ability to run the business profitably and sustainably so there is cash to pay you back! So what will it take to ensure that? You need to seek and select a qualified successor that has the competencies and skills to run, grow and deliver profit and cash flow. Will they be ‘perfect’? Doubtful. But they may have the ability to grow into ‘pretty good’ or even ‘great’! Without securing someone you have confidence in that can deliver, you have no return on that investment.

Ask us about our assessment tools to help you qualify your successor(s).

Get Started

Starting early is key. Building an intentional process to qualify and develop your candidates will go a long way towards ensuring your identified successor is a viable successor. It can take 3 – 5 years or more to instill the level of experience, skills and confidence required to run your business profitably. It’s time to get started.

When Talking Isn’t Enough: How To Hold An Engaging Conversation

What would you say if I told you to quit talking to me? In fact, I want you to quit talking to everyone. What I want instead is for you to engage with others. Engagement occurs on a different level than talking to or talking at someone. When we engage, we transform our experience of ourselves and our experience of others. Let’s look at three levels of conversation and discover what it means to be engaged.

3 Levels Of Conversation

Level 1: Level 1 conversations are about exchanging stories. I tell you about my day or week and you respond with your own story that complements, outdoes or reminds you of mine. Sometimes the intent is to validate you and your experience, as in, “Oh my gosh! The same thing happened to me!” Other times we go for the attention grab: “Oh, that’s nothing! Listen to this.” While rich in information sharing and often energizing, Level 1 conversations don’t require a high level of emotional engagement.

Level 2: Level 2 conversations circle around common interests or beliefs. We hash out the latest political scandals or vent about work. In these conversations, each party seeks commonality and support of their worldview. For this reason, Level 2 conversation frequently morph into advice-giving sessions. However, engagement begins as we tap into our core interests and beliefs in these conversations.

Level 3: Here’s where the real work gets done. In level 3 conversations, we are discovering—and appreciating—the uniqueness of the individual. These conversations have more depth, more vulnerability and require deep listening for thoughtful replies. It’s not enough to share a story, though a story might be exactly what is needed to communicate understanding. It’s not enough to discover common interests or beliefs, though we likely will. Instead, we go further and make a commitment to listen and create a safe environment for others to share who they really are, rather then the person we want them to be.

Not every conversation needs to be a Level 3. In fact, that would be exhausting! A quick round of stories at the water cooler or a lunch date to gripe about the boss is fine and often all that’s needed. But look for opportunities to hold Level 3 conversations. It may be with someone you’re mentoring, with a vendor or client with whom you seek to establish a relationship or with a colleague you feel has ideas and opinions—even if they differ from yours—worth exploring at a deeper level.

These conversations take work. It’s hard to let go of judgments or stop our minds from racing to what our reply is going to be and instead be fully in the moment and listening to the person in front of us. In the long term, however, Level 3 conversations are where the deepest of friendships and business relationships take place and grow.

Personal Mission Statements: A Two-Pronged Approach

Is it possible to create a mission statement with true meaning and value, i.e., one that actually “guides” you as a leader or person? I’ve facilitated my fair share of mission statement building sessions and more often than not the statements get left behind in the conference room with the stale coffee and doughnut remnants.

Recently however, I came across the book, The Path by Laurie Beth Jones. In it, Jones asks readers to define their CAUSE. What jumpstarts your day, ignites your fire, get you excited enough that you race to pursue opportunities around it? Your job isn’t always your cause, but it can be. For example, my cause is transforming the lives of senior leaders in small/medium-sized businesses. I have a true passion that I’ve been able to translate into an amazing career, doing what I love.

I found, however, that The Path’s template only worked for leaders like myself who were driven by a well-defined cause. Without a cause, people struggled to define their mission. After much research and testing, I developed a two-prong approach, dividing leaders into either a “cause-driven” or “values-driven” approach.

CAUSE-DRIVEN. A cause-driven direction speaks to your overriding passion but doesn’t define how you life your life. For example, here’s my cause-driven mission statement: To transform the lives of leaders through awareness, insight and action.

VALUES-DRIVEN. A values-driven statement speaks to how a person conducts himself or herself in life. Here’s an example of a values-driven mission statement: I offer grace and kindness to everyone I touch, living each day mindfully, modeling strength of character and high integrity.

I used to think values-driven statements were too “soft” to be useful, but many would argue they are more powerful than cause-driven statements as people who define their mission by a set of values will apply that purpose, or reason for being, to whatever is going on in their life.

I encourage every leader—and person—to create a personal mission statement they can turn to in times of doubt. Having clarity around your passion or values can save you sleepless nights and allow you to move into the correct guiding question in order to make sound decisions.

If you’d like a template to create a personal mission statement, the attached tool will provide you with everything you need to create your own cause-driven or value-driven statement. Once you craft your personal mission statement, I invite you to share it here.