After thinking about what he had just explained to me I said, “so if I understand correctly, you want someone to write a check for a significant amount of money so they can be the sales person, purchasing manager, plant manager and work 6 days a week? Or in other words write a big check for a job you don’t even want.”
I felt bad saying it but it was better to prepare him, than for him to find out the hard way when he tried to sell his company, expecting a big pay day. Now he could find a strategic buyer (i.e. a competitor, supplier or maybe a customer), who would be primarily interested in his gross margin, likely letting all his people go and folding the operation into their current business. However, the Business Owner said his employees were like family and had been with him a long time. He wanted to make sure they didn’t lose their job. Having no children that wanted to join the business, and no management team with the ability to buy the business, left us with the single option of selling to a 3rd party.
The conversation turned to if I were a buyer with the ability to write a check for a significant sum of money, I likely would not want a 6-days-a-week job. As the buyer I would then need to hire a salesperson, purchasing person, plant manager and expect a return on my investment. The problem is if I do that, there wouldn’t be any profit left.
Now the problem is becoming clearer and I can see the disappointment on the business owner’s face. He said, “I’ve devoted my adult life to building this business, provided a nice living and now want to enjoy the fruits of my labor but and you’re telling me it’s not worth enough for me to retire?” I explained that it may not be at this moment but that doesn’t mean it won’t be. We just need a plan!
I can’t tell you how many times I’ve heard a story like this when I speak with business owners. This is why I am passionate about helping business owners who end up in this same spot, with this same problem.
I know many of you will think that’s not you as your business is different. But, are you sure? You are gambling with your company and betting on a different outcome. I read a statistic that said 8 out of 10 businesses that go on the market will not sell, or will sell at a substantially reduced price, because of the lack of transferable value. For Business Owners having 80 or 90% of their personal wealth tied up in their business, this is a scary statistic. Which are you going to be? Will you be among the 20% that sell or the 80% that don’t? Don’t be afraid to ask for help, it’s better than having regret.
Jeff Semple is an Area President for FocusCFO, based in Canton, OH.