Have someone offer to buy your business, and then try to focus on running the business. That’s the hardest job in the world in my view. I sat with three owners this past weekend that had been through this within the last six months. Here is what I heard.
All three businesses were marginally marketable, meaning their Income before Owner’s Compensation was either just at $100,000 per year or less. Generally, serious business brokers won’t take these companies on as clients.
In the first case, the owner bumped into someone who said. “When you are ready to sell that business, let me know.”
That was enough for him to lose focus. The business needed more sales. Because of low sales, the overhead was nearly 50 percent, which could not be compensated for through decreasing costs for the owner has been through that before. He absolutely needed to spend his time in attracting and retaining new customers.
Even a couple would make a big difference. Although he’s in a small market, his top 25 accounts represented 62 percent of his total sales, and his nearby market area showed 325 prime prospects within a total of 4,000+ nearby businesses.
So, what happened when he got the nibble from a buyer?
He stopped selling. He took his focus off of his business and began to ponder his future life and what he and his wife would do and he began pursuing the buyer.
Sometime in the past six months, it didn’t work out. He’s lost nearly six months of focus on doing what he needs to do; instead he pursued what he wanted to do.
The hardest job in the world is to keep focused on your business while you are trying to sell the business.
A second owner of a business generating the necessary $100k of owner’s compensation got a bona-fide look-see from a printer in a nearby town. In this case, he did a better job of keeping focus but, as in our first case, he stopped his sales efforts counting on the business sale and instead found busy work to do around the shop, but nothing that would improve the plight of low sales.
It didn’t pan out as you may have guessed. The buyer withdrew and the seller was stuck with the results of six months of low-selling activities.
Our third owner actually went far and away above what the first two did in going FIGMO – (Forget It, Got My Orders). That’s a military term for the time between when you get orders for the new base and when you leave, which is about two weeks. Regardless of what you do, your current commander can’t discipline you further than the two weeks you are under their control, so many just go FIGMO.
He and his wife not only stopped focusing on their business; they began taking vacations down to the beach to pick out a condo. They actually found one which, in their opinion, was the hard work they needed to do during this period. Unfortunately, it wasn’t.
Amazing to me was the fact that the seller had very sketchy financials (income statement and not much else) to give to the buyer. More amazing to me was the fact the seller didn’t object to this lack of information, rather began a serious discussion of purchasing. Anyway, neither one of them would have got this deal passed a banker had it not bombed.
Yup. Hardest job in the world is to get a nibble on selling your business and then continue to do what’s most important in your business; not what’s most fun.