I had a professor in graduate school who once compared the world of business to Thanksgiving dinner. His comment was directed at a room full of students who, at the time, were intent on climbing the corporate ladder. According to him, those of us who were willing to work hard and get advanced degrees would have the ability to leave the chaos and humiliation of â€œthe little kidsâ€™ tableâ€ (supervisory and front line management positions) and graduate to sitting with the grown-ups (director level and above). And wasnâ€™t that what we all aspired to?
In lieu of another tired business analogy that revolves around sports or military strategy, here are five reasons why selling your business is like Thanksgiving dinner.
An emotional outburst can ruin an otherwise lovely gathering.
Iâ€™ve often thought of my professorâ€™s description of the little kidsâ€™ table as Iâ€™ve watched small-business owners go through the process of selling. It is not uncommon to see tears, yelling and tantrums on the sell side of a deal. The buyer, who brings almost no emotional baggage to the table, rarely exhibits such behavior.
Selling a business is an emotionally charged event. So much so that I have rarely seen an instance where a business owner doesnâ€™t â€œlose itâ€ at some point during the process. Anyone familiar with the process knows that an emotional issue can kill a deal just as quickly as any detail uncovered on a financial statement.
There are books and organizations dedicated to helping business owners anticipate and overcome the emotional challenges that come with selling a business. If you havenâ€™t reached a point where you can be objective about your business, discuss its strengths and weaknesses openly, and see it for what it is during the sale process â€” namely an asset with market value â€” then you may not be ready to sell.
Thereâ€™s no substitute for experience.
Grandmothers make the best Thanksgiving dinners, hands down. This is presumably because theyâ€™ve prepared the meal 30 times before they become grandmothers. Successful business sales take place with a team of experienced professionals who are both generalists and specialists in their field â€” including lawyers, accountants, financial planners and intermediaries.
Small-business owners tend to be extraordinarily successful do-it-yourselfers. When my husband and I started our coffee business I decided I would take care of payroll myself. How hard could it be, I reasoned, and why not save the $45 per month I was going to pay a service to do it? Somewhere along the road to employing 14 baristas, I should have started filing my employee withholding monthly instead of quarterly. Being a newbie, I didnâ€™t realize this until I got a nasty letter from the Internal Revenue Service saying that I was behind and that if I didnâ€™t get current they would seize everything I owned. Oops.
When it comes to selling your business, donâ€™t go it alone. The cost of inexperience is simply too high.
Timing is critical.
The real trick to Thanksgiving dinner is getting everything to the table piping hot at the same time. And so it goes with selling a business. Most business owners pick an inopportune time to sell that is based on their personal wants and needs, rather than when the business will get the most interest from buyers â€” and the best price on the open market. It can be difficult to do, but the best time to sell is when your business is going gangbusters and your industry shows plenty of opportunity for growth.
Good manners are expected.
Like the passing of dishes around the table at Thanksgiving dinner, the process of selling a business consists of a series of careful exchanges â€” an orderly back and forth between buyer and seller, managed so that everyone is satisfied.
If youâ€™ve represented your business as having $2 million in annual sales and $350,000 in ownerâ€™s benefit, you will be asked to please pass every financial statement, tax return and sales receipt to support that claim in due diligence. Refusing to do so, or not relinquishing those items in their entirety, in proper order and in a timely manner is not acceptable. Itâ€™s the equivalent of throwing mashed potatoes at Thanksgiving.
Everyone looks forward to dessert.
Thanksgiving dinner without the pumpkin pie would be a major letdown. Building a successful business that has no transferable value seems equally disappointing. Selling your business and cashing out after years of hard work is the ultimate reward. Prepare yourself and your business well for the day you will leave, and when you do, you will savor a slice of success that many business owners never enjoy.