Monday, July 15, 2019
What is it about entrepreneurs like me?
Entrepreneur business owners are a curious lot. Strong willed. Full of opinions and ready to tell you how it is. Not at all ready to think about the future – even after 55. Which is strange; because isn’t that what business is all about; the future? How do you get them to move toward the ball? You can’t even have a game if a ball isn’t in play. This group of people suffers a horrific fate if they don’t engage with someone like you - a business succession specialist. Yet, they are afraid of you. Everything you do is something they don’t want to talk about – today. Oh, yeah, someday. Great. Not today. Busy, very busy. Up to my armpits in alligators. Tomorrow. Here is what I’ve learned since I sold my business in an internal succession plan a few years ago.
Breaking through the owner’s hardened shell is a worthy challenge but it is difficult. Trying to connect with an entrepreneur like me to get involved in my business succession plan is hard to do. What ever else comes next, I think you can agree, that is true. Right?
We all know the fate they are going to suffer. They hang on too long, the business starts to decline. Their natural defense mechanism is to MAKE IT HAPPEN. That is what they’ve always done but they just don’t have it in them any longer. Since making it happen isn’t in the cards, the business has begun to suffer and the financials don’t look so good. Their facility doesn’t look so good either. What happens all too often is this; the boss lets it go, just a while longer, then the final straw breaks. What that looks like is as diverse as the world is diverse, it is all over the map because each business is different in so many ways. Yet, the fundamentals are the same. The business closes its doors. If they are lucky there is a liquidation sale. At least then there are proceeds to clean up all that must be cleaned up when a business closes. If they are not lucky, or if their family is the party stuck with clean up because boss person went and died in the saddle, it’s a drawn-out process of settlement that eats a lot of cash. Lawyers. Accountants. Leases. Payables.
The crazy thing is, they have employees who are loyal (because people are loyal, even today). One or a few of those employees have some on-the-ball-ness. They are younger and they dream dreams for their future. They could have a good go of running this business. In that package is a dignified retirement for the owner and their spouse. If only… If only what? If only you had arrived with the right package of ideas at the right time.
You see, pitching THE SALE to them is very similar to pitching funeral arrangements to these entrepreneurs. If it weren’t, it’d be easy to engage with them. They’d be lined up. Pitching “clean up and position for the sale” is imminently logical. But few are logical when faced with their own demise. And selling a business is an end, not a beginning, for most. I believe that’s the reason that 70% of small businesses worldwide fail to sell, and so these businesses die.
I’ve been writing a book for the last year. Ownership Ladder How a Smart employee Can Buy Out the Boss. It gives you a way to solve the problem I’ve just described. I sold my business, a multi-faceted financial services business, to my internal successor. I’ve been involved in four internal succession plans that succeeded. I think there is a secret sauce. No one wants to face their own demise, but if they could laze off, have fun and have their business continue to pay them well after they don’t have to hassle with it anymore; THAT is an intriguing idea. At least it is for me and I love it. I’m visiting my home state, which I left six months after closing the sale a few years ago. I’ll have breakfast with my successor in a few days to catch up. Mainly to have her regale me with stories of world domination. It is exciting, and gratifying.
How do you get this ball in play? It is necessary to teach the owner to let the younger generation buy it. Family maybe. Loyal long-time employees; definitely. The younger generation must learn some things too. It’s not all about balance sheets, income statements and inventory, although that is key. It is about what it takes internally to be a business owner. It’s not all sweetness and light. It’s gritty, hard core and requires fortitude. The buyer needs goals and the know how to execute on them. The buyer needs vision and the know how to work toward it. You are ideally positioned to teach it, to lead it. The entrepreneur owner is not, or they would have done it already.
The business that has this future, is a compelling future to the current entrepreneur owner. The business that sells off - maybe – big maybe – is no future for the entrepreneur owner. It’s as dead as if they rode the horse until it dropped. That is weird thinking; unless you’ve been on the horse, because you and the horse become one.
Why not connect to see how this idea plays out? It’s going to be an interesting ride.
Thanks for reading.
Final word. I’m not going into competition with you. I’m not interested in doing your business. I’m interested in educating. I hope my work supports you who are so well engaged in the succession-exit planning field. Your work is needed and important. Maybe we can bend the trend.
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