I advise every business owner to put their business up for sale as soon as possible. Yes, you read that correctly.
There are only a few exceptions. If you own a business, even a new ‘struggling-to-make-it business’, it should be for sale.
In fact, as soon as you decide to start a business, you should put it up for sale. You should frequently adjust the price that you would be willing to take for your business as well.
Pay attention. I’m not joking around. This is serious stuff.
I helped someone get a new business started a year ago. This business was very complex to set up. There was a ton of legal stuff to write up (contracts). There were lots of contractual arrangements with vendors of services from credit checks to background investigations. The website was a complicated piece too with necessary security and numerous forms requiring difficult to handle processing.
This business required a custom database too. Like all businesses, there was an accounting system to set up.
There was a budget and a plan. It was a very good plan and things were coming together exactly as planned. The owner, not particularly talented or endowed with much business sense, insisted on spending more than necessary and pushing hard in the wrong direction. I was scolded for spending less than half the budget. I saw the new owner was obviously not growing into the role at a rate that made me comfortable with spending more money.
Here’s an important tip: Don’t spend everything on advertising until you get real clear on your offer. When you settle on your message, learn what works and what has appeal, spend on marketing. If you don’t get your message clear first, you just waste money. Let’s go into this another time.
I could see the wreck ahead so I jumped off the train. The owner spent the budget and more.
In spite of very poor management, there was a lot of positive in this business. All that set up work had been done. The business jumped in search position and actually ranked very high in the market. The website was smart and attractive. So the business took off, right?
No, the business failed. It failed because the marketing money that should have been conserved wasn’t.
You can’t buy customers. Oh sure, if you have a garage full of I-Pads and your store goes broke, you can sell sell them at a cheap price and that’s buying customers. But that isn’t a profitable way to do business.
Marketing will not make people buy something they don’t want or don’t trust. (In spite of what you learned from Mad Men)
If a restaurant advertises great specials and attracts big crowds and then serves up lousy food, that restaurant won’t succeed. If crowds show up and the service is lousy, the restaurant will fail. If the restaurant advertises great tacos but only serves pizza, things aren’t going to work out.
Get the message right first.
So what does this have to do with selling a business?
I saw recently that the business that took all that effort to start had folded. The money and the work went down the drain.
Yes, the person who started the business didn’t have the stuff to run a business. I could see that pretty early on and tried to slow the process so this ‘entrepreneur’ could catch up. The business closed within a year of my departure. It survived for 18 months.
Here’s the question. Even though that person couldn’t run the business profitably, the business had built a name—at least an online name—and had put in place a lot of very hard pieces to assemble. All of which could have been sold. A more capable person could have made that business work.It was a great model.
It was yet another bad decision not to try to sell the business even though it was losing money. Yes, you can sell a business that is losing money. It happens every day.
So what if your new business is doing well?
You know the expression, “everyone has a price”? If you put $100,000 into a business and after a year of operation someone offered you $1,000,000 for the whole thing, would you take it? What would you take? There’s a figure out there you would take and someone may be willing to pay it.
And if you’ve been in business for a few years? You have a price. But what if the business is struggling? Someone out there thinks they can, and maybe they can, turn it around. Set a price.
There are a lot of people who want to get into their own business and you’ve done a lot of the ground work. Put it up for sale.
And if you don’t want to sell? Set an outrageously high price. Why not? If someone suddenly offered it, you could start again with a lot more money and a lot more experience.