Selling My Business: The Lessons I’ve Learned

I’ve heard it said that to become an expert at something, you must have worked at it for at least 10,000 hours. After that amount of time, you’ve likely experienced enough scenarios regarding a subject that you could be considered an expert. Some of you could be considered experts in your field. I have been called an expert, even serving as an expert witness in court cases. And yet, I believe that no matter what level of expertise you achieve, there are always going to be lessons that you can learn. That’s why I’d like to share some of the lessons I’ve learned through selling my business.

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• My first trip to the Rocky Mountains in Montana
• The failure rate of businesses when undergoing great transitions
• Preparing and supporting your team through times of great change in business
• The importance of increasing employee engagement
• Letting your team be the driver of change
• Preparing your customers through organizational change and communicating with them
• The value of knowing your customers and overcommunicating with them
• The role of attitude in successful business transitions
• Being ready for extra negotiations in the process of selling your company
• The three special people you need in your life as a business owner
• How I almost cost myself six figures in taxes
• Writing a personal financial plan, a strategic business plan, and getting a best-in-class valuation

Selling My Business and the Lessons Learned

Now, I’m no rookie when it comes to selling my business. In fact, this most recent sale marks the sixth business I’ve sold throughout my career. However, each business is unique and I learned some valuable lessons from this experience that weren’t as evident in my previous sales. I realize that my experience is unique. Most business owners won’t have the opportunity to sell multiple companies during their careers. According to an often-cited statistic from the Exit Planning Institute, most business owners will never experience selling their businesses even once.

Friends, it doesn’t have to be that way. That’s why Financially Simple exists. We want to give you the tools and resources you need to potentially grow your business into a saleable commodity. I don’t want you to look at that statistic and become hopeless. There are plenty of things you could do to improve your chances of selling. And when you do, you’re going to need to know what I’ve learned from selling my business. So, let’s dig in!

Prepare Your Team

This might be one of the most important lessons I’ve learned. As I was entering into this process, I had this feeling that when I announced the sale of the business, people were going to become “unsettled.” Even though it’s one of the only constants we can depend on, people don’t like change. It’s uncomfortable. Change is unsettling because we don’t know what’s on the other side of that change. By its very nature, change is disruptive. So, people don’t typically enjoy change.

This is supported by the findings of a 2020 study by Gartner. During this study, they found that businesses are frequently undergoing big changes, and about half of the change initiatives fail. More than this, the report discovered that only 34% of these initiatives report clear success. On the other hand, 16% report mixed results. Looking at these stats, you can basically guarantee that your team will become unsettled by the news. Therefore, I implore you to take some time to prepare your team before you announce a new development, department, sale, etc.

You can prepare your team by painting a clear future. That doesn’t mean you shouldn’t change things. Instead, be crystal clear in explaining how the changes will affect them.

During this process, my wife Emily, and I had one non-negotiable. We wanted this to be an opportunity for everyone on our team to be able to “level up” their careers. We didn’t want them worrying about whether they would be fired or miss paychecks. Instead, we wanted to be able to approach the team and honestly tell them that this choice would enable them to reach their dreams. After a lot of work, that goal came to fruition.

The Importance of Setting Clear Expectations

In order for big changes to take hold, people at every level of the organization need to understand why these changes are taking place. As for myself, I was tired. I had been a business owner for 30 years and so much of my time and attention went to that. My wife needed a husband. My kids needed a father. We haven’t gotten to have a lot of vacations because I was just too busy with the businesses. Candidly, there were times when my businesses even replaced God. So, I was very clear in outlining why this was a good decision for me and my family, as I approached my team with the news.

But how do you deal with the emotional side of things? What about your team’s attitude toward the change. Friends, if you don’t think you’re going to be an emotional wreck as you go through this process, get ready because that horse is going to kick you right in the teeth. Just last week, I was filling out a form for a client and I looked up and saw a piece of furniture in our office. All of a sudden, I was whisked back to the moment when Emily called me with glee in her voice, to tell me she had just found the perfect piece to go in our office. You will go through many emotions, but so will your team. So, you’ve got to set clear expectations about controlling emotions and keeping a good attitude.

When leaders and employees believe successful change is an unlikely outcome, momentary setbacks can be viewed as the dead canary in the coalmine of change initiatives. Suddenly, your employees could become disengaged and the next thing you know, you’ve got a self-fulfilling prophecy on your hands. So, you’ve got to take the time to consider your team. That was my number one priority, our team. I hope, and I think, they felt that.

Let the Team Drive the Change

I carried this mindset into selling my business. I believe that any time a change initiative is taking place — I’m discussing selling a business but this could apply to any type of major change — you should let your team drive the change. According to the same Gartner study that I mentioned before, shifting implementation planning to employees can boost the probability of success by 12%. You see, successful organizations empower employees to experiment with solutions and new ideas, but also set guardrails to prevent actions from derailing the change. But why?

There are exceptions to the rule, but the majority of us don’t wake up in the morning thinking, “I’m going to figure out a way to slack off today.” Most people don’t have the intention of stealing time from their employer. Instead, most of us want to do the best we can to accomplish the vision, mission, and values we’ve aligned ourselves with. It’s human nature, folks. We want to do good work and be rewarded for a job well done. So, you must prepare your team. Paint a clear picture, set the expectation, and let them drive the change. But what about your customers?

Communicating Change With Customers Can’t Be Overlooked

Change is unsettling. Are you sensing a theme, here? Consider this, one-third of consumers say they would consider switching companies after just one instance of bad customer service. To prevent this, you must be proactive and over-communicate with your customers. I’m not suggesting you call them several times a day to ask how their day is going or to talk about what you ate for lunch (it was pizza for me). I don’t mean that type of over-communication. Instead, provide them with all of the information up front.

Try to answer every question before they ask it, but be available to answer any that might come up. We came up with a list of pre-written answers to every question we could possibly think of. Then we role-played through our client conversations, as a team, before engaging with our clientele. While you’re communicating the changes that will take place, there’s something else to consider. You want to reach your clients in the method they feel most comfortable with.

(Method of) Communication is Key

According to Ameyo, 57% of customers would rather contact companies via digital media such as email or social media rather than use voice-based customer support. So, if you have clients who hate to talk on the phone, don’t call them. Likewise, if you know that you have a client who never checks their email, then that’s probably not the best way to reach them either. In our case, we drafted an email notifying our clients of pending changes and how little it was going to impact their client experience. We followed that up with a series of short client calls, text messages, and even made a few social media posts.

Friends, don’t forget that communication is a two-way street. You must listen to consumer feedback. Customer feedback can be a great way of gauging how your clients truly feel about the changes taking place. In fact, Bill Gates once said, “Your most unhappy customers are your greatest source of learning.” I actually had a client tell me, “Man, Justin, it sounds like you’re off to a rocky start with this transition.” I told him that I didn’t understand and asked what he was referring to. As it turned out, he was only joking with me, but it led to him revealing how well he thought we had handled everything.

Attitude is Key

Your attitude throughout the process determines how well or poorly the experience goes. So, watch your attitude. Your attitude equals success. You see, as the owner, you’re under the microscope. Everyone, the buyer, your team, customers, friends, family, neighbors, they’re all watching how you handle this change. This is because they know change is uncomfortable. It’s unsettling. Most people will go out of their way to avoid change. But not business owners. No. Business owners will dive headfirst into the change, get knocked down, and hop back up with a bloody lip and a smile. That’s the attitude you’ve got to have to successfully navigate this type of change.

Next, you’ve got to be ready for extra negotiations. After you’ve signed your LOI, negotiated a deal, and signed your definitive documents, it’s not over. There are things that can happen beyond anyone’s control. It even happened to me. There are so many moving parts that something is bound to change. It’s easy to become frustrated during the process if you don’t keep a tight rein on your attitude. So, watch your attitude, closely.

Plan, Plan, Plan

Finally, you have got to plan. Friends, I’ve often talked about this on the podcast, but you’ve got to have three special people in your life. You’ve got to have a CPA, a Financial Planner, and an attorney. Now, I’ve got a confession to make. I almost cost myself six figures in taxes. I’m a CERTIFIED FINANCIAL PLANNER™ and I’m considered an expert in the financial industry. I’m also a Certified Value Growth Advisor. I know how to grow companies so they can be sold. Likewise, I’m a Certified Exit Planning Advisor. I know how to walk people through the sales process. But I got too excited in the process and missed a step.

Once an LOI is signed, you have limited your tax planning. I was so close, if not for my attorney. I had already done my financial plan with my CFP® and knew the tax plan I wanted to put in place. But it was the attorney, with a simple pause, that saved me significant tax dollars. The CPA and attorney came alongside each other and met with me and the financial planner to devise a strategy that would allow me to make the transaction in a tax-sensitive matter. So, if you really believe you can enter into something as monumental as a business sale on your own, all I can say is good luck.

Planning is vital for business owners. According to the EPI, 75% of business owners have never done a personal financial plan. If you haven’t done a personal financial plan, you probably haven’t done a written strategic plan. Based on that, I can tell you your business probably isn’t valued at a best-in-class valuation because planning reveals holes.

Wrapping Up…

There are four major lessons that I learned while selling my business. If you’re in the process of making the ultimate sale, I hope you heed these words and have a successful transition. If you’re still a ways off from trying to sell, keep these lessons in the back of your mind. Life is hard, but life is good. Navigating the business sales process can be frustrating but following what I’ve learned could make it at least financially simple. Hey, let’s go out and make it a great day!

Do you have questions about what to expect during the business sale process? Are you ready to prepare your company to make the ultimate sale? Reach out to us. Our team has helped many walk through the process.