The first was an established business with one location in Austin and the other in San Antonio. Their reputation, second to none. Yet foot traffic and inquiries were down due to a failure to evolve with consumer needs and taste.
When the founder and CEO was asked about a succession plan, his response surprised us: “Oh, I don’t know, I guess we will just shut the doors and walk away. ”My colleague and I looked at one another in disbelief.
“Are you serious?” I asked him.
“I guess,” came his reply. What was most shocking was that, aside from the naïve reply, he appeared to be a fairly astute businessperson (prior to the question)
After convincing him to have a professional valuation he agreed that selling might be a smarter option. It was a year and a half later when he walked away with $8.5 million.
The other scenario is the opposite. I spoke with a small business owner who was insistent about selling his small business for $250,000. Though the financials showed him operating near a loss, he wouldn’t listen. Nor was he interested in a strategy intended to bring the business to be worth his desired price. He just wanted to un-load it. Eight months passed and he finally relented, accepting an offer for 7% of his original offering.
What was the one thing they had in common? Burnout.
This is why, long before a business owner approach the end of the road, a carefully crafted business strategy is necessary. Considering the business’s history, its weaknesses, and its opportunities (and then merging them with the owner’s personal goals) offers a comprehensive road map.
Better yet, a comprehensive strategy allows the business to become more competitive. This results in it being worth more at the time of succession.
Plan ahead before you need to – because burnout comes faster than one realizes.