Setting yourself up for success in the months and years before selling your business is important, but what do you need to do to ensure your continued success after it’s in the hands of someone else? The process can begin as soon as you make the commitment to sell. That’s when the work to execute your succession plan begins, but you don’t have to go it alone. Jenifer Martin, founder of Zest Business Consulting returns for the 2nd part of her 3-part series to explain the necessary steps in the process of selling your business within the next two to five years.
Sometimes we go along in our daily lives and we're like these hamsters on the wheel and we're running, running.. and we don't take an opportunity very often to be very introspective. The first thing I would do is I'd have them think about their business right now and maybe what their motivation might be for selling.
- Jennifer Martin
Jeff: Good. We've been looking forward to it since the recording of the first show and it was really great to hear you talk about all of those things that business owners need to be mindful of as they're looking forward to selling their businesses insay that two to five-year time frame from right now. But let's go ahead and let's get started with part two. Where would you recommend someone start, Jennifer, if they're just kind of tossing around the idea of selling their business?
Jennifer: The first thing I would do is I'd have them think about their business right now and maybe what their motivation might be for selling. I talk to a lot of people that are kind of in the should I stay or should I go, and if that's where someone is I suggest that they give some in-depth thought to why they're even wondering about the possibility of selling in the first place. Are they burn-out, do they feel like they're working too hard without enough to show of it? Have they lost that loving feeling for what they do? Or if they just run the business for a number of years, it's been wonderful and they've gotten older or just ready to move on. Whatever they come up with I find the best way to determine that answer for them about what to do is really to look within for guidance. Of course if that doesn't work go talk to a therapist, or a business coach, or a trusted adviser.
The first thing I would do is I'd have them think about their business right now and maybe what their motivation might be for selling
Jeff: Everybody has their own reasons for wanting to sell. What you're talking about, it sounds like it's pretty basic. But what if some of our listeners who might be thinking even just kind of considering mulling this over selling their business. What if this could sound overwhelming to them. The whole idea, the whole process could be overwhelming. They could say, "I guess I'm not ready to sell yet. I'm just going to hold on to this thing." Where would someone start if they don't know where to go, they don't know how to begin the process of moving forward even inch by inch?
Jennifer: I find that is exactly the challenge for some people. They're maybe not quite satisfied where they're at and yet there's almost this neurolysis, paralysis that holds them back. And so a lot of people come in the door to work with me at that point and I work with them with a series of questions that will help anyone start to uncover their truth. And I'll share a few of these questions. Normally, I'm spending a couple of hours with someone so that we can really get into what's happening. But some of the great questions would be: am I still motivated to operate my business? Where's that coming from? Do I still feel congruent with the products or services that I sell? This is a simple one but a lot of people overlook this every day. Does my business bring me joy? How does my business reward me for my time and effort? Then I turn the corner into series of questions about, "If I weren't in this business what else would I be doing?" So you can kind of think a little bit forward thinking. Is there something that's really calling to me right now even if that's getting in an RV and taking off across the country and just being done. And then I get into the money point. The common sense part, am I breaking even at my business? Do I know the value of my business in today's market, and do I actually have a viable business to sell? And then maybe if that's the case what would my profits be after debt? Is that something that I'd be satisfied with? I'll say these are a lot of questions but this is usually where I'm going to start with somebody and working with each person individually. But you’ve got to start somewhere and start peeling off the layers of that onion, and generally these are the questions that will help prompt the beginnings of the answer of should I stay or should I go.
Jeff: Let's camp out here just a little bit, Jennifer. Are there ways to kind of work into this a little bit more to kind of, you talked about peeling back the skin of the onion just a little bit. Let's just work on this a little bit, kind of get a little bit more involved. How do you do that?
Jennifer: I offer my clients and of course all of my listeners today -- there's a great exercise that can be amazingly insightful for anybody to figure out what's happening here. The first thing that I have them do is literally track everything that they're doing for about three weeks. And I know that sounds like a long time but you've been in business for a long time and or even not but you still shouldn't take selling it lightly. What I have them do is from the moment they start their business day, start tracking down: looked at email, talked to a client, handled a vendor dispute, everything that they're doing. So they've got this gigantic list compiled of literally everything: settled an employee challenge, hired somebody new, placed an ad, whatever they're getting involved in. After they've got this long laundry list of tasks and things that they've accomplished, I have them come back to the list and rate each item on the list on a one to ten scale, ten being the best. And ten really showing their greatest level of enjoyment, satisfaction, and reward. And then after you've got everything rated on, like, "Do I love doing this? Is it bringing me joy? Is there meaning here? Is it satisfying?" After you go and do your one to ten you go back to the list again and highlight your sevens, your eights, your nines, and your tens. In this way you are going to discover if there's a lot of high numbers, if there's not any high numbers. Is there something there that you can make a job out of, basically all these things that you enjoy? And I feel that this is where the real hidden conversation starts to help a business owner determine what's next for themis to take a practical look at what's happening now.
to help a business owner determine what's next for themis to take a practical look at what's happening now.
Jeff: I have question Jennifer just based on what you talked about there. I'm just kind of wondering, a fly on the wall kind of curiosity. Have you ever had any business owners that actually were kind of made it uncomfortable by going through this process where they kind of revealed to themselves certain feelings that they didn't really understand that they had about their work and about whether or not that was something that was still of interest to them and whether or not they still had that "loving feeling" for their job. Anything like that you've ever come across where your clients were kind of made uncomfortable by the results of this study?
Jennifer: Yes. I can say absolutely. Sometimes we go along in our daily lives and we're like these hamsters on the wheel and we're running, running... and we don't take an opportunity very often to be very introspective. Or we have financial responsibilities and we think we have to just keep running so we keep having the money pulling in. And when we actually stop to take an introspective look, sometimes it could be pretty scary. So yes I have people go both ways.
I had a client come in and he was a third generation business owner of his family's business. It was a chain of grocery stores. And when he came in he said to me, "I just want to figure out what I can do right now so that I can sell my business next year at the highest amount." I said great. So we got into it. And when we started uncovering some of what he wasn't enjoying, and we did this list, what we realized is that one of his passions was food. He was a foodie. The guy loved eating. He was someone who had fun in the kitchen making up recipes. He had all these family recipes he loved. And I said to him, "Let me get this straight. You work in a grocery store and you love food. So do you think that there's a place where you can bridge the gap so where you can still have enjoyment and have this business." Not that my first course of action is always to push somebody out the door one way or the other. But I feel like my responsibility is being the anchor for that individual, that owner's joy. And what it end up happening was the business owner realized that he did have joy for food, just not for the grocery store business. And he wound up starting to delegate a lot of his responsibilities. He got involved with the deli side. They hadan unused deli, and a butcher shop, they had all the food but they weren't doing preparation. And so he basically turned the corner. He realized he needed just to let go of being the general manager. And he got into doing something that was fun for him, making up recipes. He wasn't in the kitchen every day but that deli became his baby. And it also became another profit center for the business.
So just to give the end of the story. He went his merry way, felt good about what he was doing. We worked together for maybe six, eight months through the transition so that he could be spending his days doing what he loved. And then he came back to me a year later and said, "I'm ready to expand. I want to buy a couple of other locations and expand my area, what I love into these other locations." I guess it's not a perfect example of somebody who didn't love what they found. But I find that occasionally either it's time to move on, and the key is finding someone who can help you rediscover your joy and your passion, what’s meaningful. Or just find another way. Come in the side door instead of the front.
Jeff: It's a fascinating story, so asyou say, you're never really sure what you're going to see or what you're going to find out about yourself until you really kind of go through this process. And you might uncover some new information, some areas of maybe your business or another type of business, perhaps related, perhaps not that you never knew that you had. Fascinating stuff, Jennifer. I know you have an interesting technique that you teach your clients to help them really find the right answers for themselves where making important business decisions are concerned. Are you open to sharing what that might be with our listeners?
Jennifer: Yeah, I'm happy to share.
when we actually stop to take an introspective look, sometimes it could be pretty scary. So yes I have people go both ways.
Jeff: Terrific, good.
Jennifer: I always think there's the grounded practical stuff and then we've got the inner game, what's going on between the two ears. And I know that the best way to have somebody actually slow down and make good decisions in your business, whether it's should I stay or should I go, should I take in a business partnership, should I open a second location, whatever it is, is to actually slow down. And they say do a checkup for the neck up. Well, I say, do a checkup from the neck down, or both I guess. So what I have people do is what I call a head-heart gut check. And I have them start by asking them these questions. It might just be is it time to sell my business? Is this my highest, best good, or is this really the right thing for me right now? I'll have them physically take their hand; put their hand on top of their head. Give it a little rub around for two or three seconds, and then say to them, "I want you to ask your brain for the answer to this question."
So I always start there because the brain always has some opinion. And then what I have them do is once we hear what the brain's telling them, yes, no, whatever the case is, not now, wait 'till later, then what I do is I have to take their hand again and then put it in the center of their chest where we think our heart might be. Rub it around just for a moment or two, connect your heart to your hand. And then stop, take a deep breath, and actually see if you can communicate with your heart. They say the heart knows in romance, I will tell you the heart also knows in business. So stop, take your hand on your heart, and ask your heart the very same question, and just go with whatever the first answer is, don’t try to judge it. And then I have them do the same thing with their gut. And we've heard that there's a second brain in their gut, maybe the scientists are saying it's the way that we process food, but what I can tell you is that we all have a gut wisdom, and that's what we're looking to check in with. The first time you take your hand and put it right on yourgut. Rub it around for two or three seconds. Stop. Have the intention that you're going to ask for your gut for your gut wisdom on the answer. And I find that once you get the brain out of the way, the heart and the gut are probably going to tell you the truth, the best thing that's for you at this point. Our bodies are amazingly wise. So I recommend people try that with something kind of simpler than should I stay open or close my business to start out with so you can get a feel for it. But it's a brilliant tool that anyone can use anytime to help them make decisions not just in their business but in their lives.
Jeff: Excellent points, and what we're going to do when we come back Jennifer Martin is we're going to pick up from there, once a business owner knows for sure what they want to do, what to do next. Setting yourself up for success through the entire process of selling your business right through to its completion. I'll be back with business consultant Jennifer Martin when Deal Talk resumes in a moment.
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Jeff: Welcome back to Deal Talk. I'm Jeff Allen with my guest Jennifer Martin, author, speaker, and founder of Zest Business Consulting. This is part two of our three-part series to prepare you for selling your business. On this segment we're talking about how you can set yourself up for success throughout the entire process of selling your business. Jennifer, before we went to break we talked about getting your gut and your heart kind of in the same place, on the same train of thought. Let's imagine that we've got through that and that we as business owner are clear that we want to sell our business. What do we do next? Where do we go from there?
Jennifer: Okay. We've got a clear picture that we're going to sell and we feel mostly congruent with it, hopefully. And then we want to take a look at what's realistic when it comes to money? Are you personally expected to just rake in the dough or are you're going to barely pay off your debt and just skate out? Or maybe you discover that there's really not a lot of money left in your business after you're done. We want to take a look at really the practical grounded part which is what do you need to get out of the business money-wise, and then determine if that's realistic.
I always think there's the grounded practical stuff and then we've got the inner game, what's going on between the two ears.
Jeff: Once we do that we're going to have to kind of answer some more detailed questions and maybe get the input of a third party. I'm kind of assuming to kind of help validate everything. So would you recommend working with somebody at this point, maybe a business consultant or an adviser of some kind?
Jennifer: Absolutely. This is exactly the time that you want to bring in an unbiased, educated, experienced third party. This is an exploration process. And sometimes when we're in the middle of the forest we can't see the trees. And I know where my own businesses have been concerned when I’ve gotten to that point where I thought about sellingand I've put my heart, my soul, my time, my money, and my energy into it. And when it comes to deciding do I sell my baby because a lot of my businesses felt like my baby, I knew well enough that I wasn't the best person to be solely making up that decision. Because there's a lot of emotions around selling or moving on this is absolutely the time to seek outside support.
Jeff: Jennifer, some people are really convicted, they're decisive, and they know what it is that they want and they know what they don't want. So does it make sense to hire someone if you know in fact exactly what it is that you want to do with your business?
Jennifer: Absolutely. I would recommend, if you've gotten to that point, you know that you're ready to create a change, whether that change is three months from now, or two years, or five years, the best thing that I recommend doing is start by having a professional valuation of your business completed by an experienced and busy business broker. And the reason I say experienced and busy is we all know that business has changed over the last five to ten years. And technology continues to change at the lightest speed, and guess what, human beings are changing too. We're so tied into social media right now. Everything's so fast. We've got all these different things happening. So the best thing that I can recommend is make sure that you're reaching out for that business valuation to someone who has a great deal of experience, and they've been putting together evaluations of businesses in today's market within the last two years. Because those people are going to have a better handle on the reality, not just what used to happen three or four years ago.
Jeff: Anything else that you can think of that would be helpful for someone kind of at this stage, they're talking to a third party consultant, someone that they can rely on, somebody who's busy, someone who's in the business and also talking to business appraisers. What else could be done at this point?
Jennifer: There's kind of a long laundry list at this point but I'm going to narrow it down to my top four. And I think the first thing, again, I'm going to backtrack a little bit. So definitely want to get your business appraiser involved, you definitely want to talk to any business partners, or life partners, family members, make sure that all your support team, your dream team, make sure they're congruent with what you're planning. If they're intimately related make sure you check in with your accountants so you can find out about tax liabilities. See if you need to consult with a financial planner, make sure the money's in order. Then we'll go into the list of four things.
The best thing that I can say if somebody knows they're ready: go back to your task list, this one where I said you're charting all the things you've done for three weeks. And start by thinking about who on your team can you delegate some of these duties and responsibilities to. And if you don't have anybody on your team, do you need to hire someone. Basically I want you to start thinking and then systematizing, and then hiring, training if you need to, and basically put yourself out of ajob. So there can be an easy transition to whatever's next if it's a sale, not if you're closing the business. The same thing for your customers, start making a list of all the customers that you have regular interaction with. And this is really common for a small business where a lot of times the clients love to talk to the business owner. Well guess what, the business owner might not be around forever. So you don't need to tell them, "Hey, I'm selling the business. I might not talk to you in six months.” But you want to start building the networks internally, so that if there are other people who can handle that relationship you start passing the baton, that's a great place to go.
The next thing is to start thinking what kind of transfer of ownership do you envision? There's asaying that if you don't know where you're going, how will you know when you get there? Thinking about the transfer is huge. It's as important as having a vision for your business for growth. So start to think about do you want to sell it outright? Are you willing to carry back a loan? Are you interested in taking on business partners? Do you want to maintain some sort of interest? How much time and energy are you willing to give during the transition? What are you willing to sell, what are you not willing to sell? Think a lot about what the actual nuts and bolts might be and start to write it down. Have a plan on paper. At least you know what you're shooting for. It doesn't mean that you can't fine tune later, but have a place to start. And one question might be is: do you want to consider an alternative to an outright sale?And that would be again a good ESOP, an Employee Stock Ownership Plan. I see a lot of manufacturers going in that direction right now. Do you want to sell to a private equity fund? Look at all the choices. And then the last thing on my list, this is going to sound so simple that you'd be surprised that I’d even say it, that so many business owners are focusing on selling and make that the end pointand not thinking beyond the sale. It's kind of like in martial arts where you have the brick or the block of wood, and you could just take the side of your hand and hit the block or the wood. But when they train you they say basically focus on breaking through. They want you to focus beyond the wood. And the same thing takes place with your business. Start focusing on what's going to happen after the sale. And so I think one of the most important drivers of a successful transition is having a post transfer life plan that's more exciting, more rewarding, gives somebody a clear set of business, personal, family, financial goals so that the business owner can actually move towards something that they love.
the best thing that I recommend doing is start by having a professional valuation of your business completed by an experienced and busy business broker
Jeff: And there are some very, very, highly credible, trusted experts in the area of wealth management business succession that can talk to you about these types of things. It just takes a little bit of research but it's well worth the time. And it's probably worth the time to talk to two orthree of them to get some sense of where their strengths lie. It's very important indeed because a lot of times like you say, Jennifer, we think that we've covered all the basesand we've thought everything through but there is kind of abeyond beyond what we're talking about here, just simply selling our business. That's not necessarily the end to the means but we need to prepare ourselves afterward and make sure that our personal lives are handled as well after that. And the thing that I really like about Jennifer is that she never comes empty-handed to our party here on Deal Talk. And we understand that you have another offer to make to our listeners. Let's talk about that. What do you have for us?
Jennifer: Thank you. I talked to a lot of business owners at various stages of their business and I know from being a business owner myself that sometimes we can be so enmeshed in what we're doing that it can be extremely valuable just to talk to an unbiased third party that you can trust, as experienced enough to trust with the real stuff, the real deal. I always tell my clients no matter how bad you think it's going for you, I think I've probably been there at least three or four times. So there's nothing that anyone can say that would surprise me or frighten me away. My offer for your listeners today is to take me up on a special that I've created for the show, for Morgan & Westfield, for the clients and the listeners. And it's an opportunity to come speak to a business professional who's worked with hundreds of business owners and owneda number of businesses herself, take me up on my new client two-hour strategy session. It's $195. It's a special rate that I made for the listeners. It gives people the opportunity to bring questions, to do some brainstorming, to ask me specifically like you would a consultant for some possibilities. And I find that 99 percent of the time people walk away with clear next steps that they can feel confident about moving forward with, that will help them move towards their goal.
Jeff: Outstanding, Jennifer. We appreciate the offer that is. What is the best way for someone to get in touch with you if they’d like to move forward with that or just ask you some questions, or have any other needs that you might be able to help them with?
Jennifer: Sure. They're always welcome to reach out by phone or email. The phone is area code 805-669-7160. Or you can email email@example.com. Or visit our website, www.zestbusinessconsulting.com.
Jeff: Perfect, Jennifer Martin, another great program, very useful information. Thanks so much again, and I'm looking forward to part three of our three part series coming up soon. And again, we can’ttell you how much we appreciate you being here out today. Thanks again.
Jennifer: Thanks Jeff.
I always tell my clients no matter how bad you think it's going for you, I think I've probably been there at least three or four times
Jeff: Jennifer Martin, founder of Zest Business Consulting has been my guest once again today on Deal Talk presented by Morgan & Westfield, the nationwide leader in business sales and appraisals.
If you're thinking about selling a business or buying one call Morgan & Westfield at 888-693-7834 or visit morganandwestfield.com. And for more valuable information and insight from our growing list of small business experts make sure to join us again here on Deal Talk. I'm Jeff Allen. Thanks again for listening. We’re going total to you again soon, right? Take care.