Many owners are thinking of selling their businesses, usually because 1)they’re tired of running it; 2)they get a good offer, and 1) is true and 3) their kids aren’t interested or capable of running it.
The Wall Street Journal had a great article this week about sticking around after you sell your business, which we’d like to highlight for you:
1. Most sales involve seller financing these days, which is a nice retirement income, and wise from a tax standpoint, but it’s a good idea to stick around and make sure the business is running correctly. Not the way you might have done it, but on sound business principles.
2. Have the buyer provide a business plan that you agree to, and in particular a marketing and sales plan. He/she will have to expand the business anyway to pay you off, so you’ll have to be involved anyway. You should be tolerant of new ways of doing things.
3. If it’s a family owner business that’s being sold (and we recommend that, rather than being gifted), it’s also a good idea to stick around. Speaking personally, when I purchased our family business, my Dad stuck around, and generally offered wise counsel. Occasionally I had to remind him who owned the business, but not too often.
4. Does it seem like you can trust the buyer? Vet his professional and personal background nine ways from Sunday. If your gut says no, don’t go.
5. It’s not a bad idea to decide on sales and profit targets with the buyer, to make sure he/she succeeds. Sometimes, as happened to me, we were a little too successful and stretched our financial resources, needing a little extra time on the payment. A call to the seller helps if you’re doing owner financing.
6. Decide on what you want to do. Odds are you’ve worked all your life, and you might not have any hobbies. Personally, I’m toying with doing car restoration and courses for our School. I’ve fixed manufacturer mistakes all my life on cars. My wife is just against me doing it in our garage. So, I might go to work for a friend in his garage. He likes the idea.
So, ponder these things over the weekend.