If you’ve been in business for any length of time, you’ve certainly earned your right to a healthy dose of skepticism. Most business owners have endured more than their fair share of eye-glazing, brain-numbing sales pitches and vendor-sponsored events. They’ve been pushed to try numerous products, procedures, and systems; many of which have failed to deliver anything but mediocre results.
That’s why, even though you might be near retirement and more than ready to start the process of selling your business, solutions presented to you that promise a better, more financially lucrative, and less stressful way of doing so might you on the immediate defensive.
“Too good to be true.” “Heard it before.” “If this works so well, then why doesn’t everyone do it this way?” are a few of the familiar, yet understandable, responses that Baby Boomer business owners give when urged to look into alternative selling strategies.
Business owners over 50 are looking to sell their businesses without encountering adverse tax consequences and without having to pay commissions and unnecessary fees. They also want to sell within a more reasonable time frame than is usual and they want the fairest price for the business.
Perhaps most importantly, sellers fear outliving the proceeds from the sale of their businesses and seek a way they can create a lifetime income which they cannot outlive.
These are concerns which, unfortunately, the old school method of selling a business is simply unable to address.
Pre-retiree business owners are slowly coming to grips with the consequences of a huge demographic shift, not just in the United States, but in the entire world.
For many years, there has been a dwindling supply of qualified business buyers. That lack has been exacerbated by the simple fact that the generations following the Baby Boom are getting smaller and smaller.
Unfortunately, the shrinking pool of buyers, coupled with economic uncertainty and tighter credit, has created an untenable situation for boomer sellers.
Increasingly, they are having to make tough choices when it comes to retiring.
Boomer business owners who are not leaving the company to their heirs are often finding themselves:
- Running the business for a lot longer time than they ever planned.
- Selling the business in hurry at a bargain basement price, thus increasing the odds that they will not have enough money to retire comfortably.
- Resorting to using a business broker and having their companies on the market for months, perhaps even years.
- Closing down and walking away- even though the business is still profitable.
Within a few years, the number of business owners ages 55-75 who want to sell, or who must sell due to health or other adverse life circumstances, will double.
For many of these owners, the successful sale of the business is the cornerstone of their retirement plan, comprising the bulk of income they expect to receive in their later years. Most of these pre-retiree entrepreneurs have just one shot at selling their companies. A small mistake could cause them to run out of money in retirement or have to drastically alter their lifestyles to accommodate limited income.
Unless there is an actionable exit plan in place at least two years before they want to retire, boomer owners could face a truly painful situation when the time comes to leave.
After all, the current “old school” sales process has a lackluster 3% success rate right now. It’s not a stretch of the imagination to suggest that this rate could go even lower as the critical mass of pre-retirees wanting to sell builds.
If you are a business owner over 55 who is planning on selling a business to fund your retirement, then you need to find a qualified mentor to help guide you through the complexities of the exit process.
Business brokers should always be the LAST resort if you are serious about selling your business for more money, with less stress, and with a view to creating a stream of income you can’t outlive. Most brokers cannot do that for a seller, even if they want to. It’s better instead to seek guidance from an experienced business owners who has been in the trenches and understands what selling a business is all about.
If you do, however, decide to use a broker, or if you seek the advice of a business acquisitions mentor, you must exercise due diligence or risk an adverse outcome.
Be certain you thoroughly check out the qualifications of these advisors.
Always insist on someone who:
1. Has a minimum of 10 years experience in the real business world. An MBA is nice, but ask your mentor about actual businesses he or she has bought and/or sold. Theorists and philosophers have zero value when the time comes to actually SELL a company. Look for solid, quantifiable experience.
2.Can produce verifiable client testimonials. Any worthwhile mentor or broker ought to be able to produce real clients with whom you can speak. If the only thing he or she is willing or able to give you is some vague written testimonial from “Sam S.” (who may or may not be a real person) then you should avoid that consultant.
3. Asks you important questions about your desires and goals for the sale. Part ways with any so-called expert who doesn’t want to hear your wishes, concerns, and ideas.
4. Has the knowledge, tools, and business acumen that are essential to a successful business transition. This is no place for hobbyists or dabblers. Demand someone who specializes in buying and selling successful businesses. Don’t be afraid to ask the question, “How many deals have you personally done?”
5. Knows how to structure the sale proceeds so that you get a predictable, reliable stream of income for life. Ask potential mentors the question. “What can you do to help me ensure that I never outlive my retirement income?”
There are several other important factors to consider when partnering with an expert, including some less tangible, but nevertheless important factors that should be present.
For instance, is it easy for you to tell that this person actually enjoys what they do? Does he or she seem to radiate genuine enthusiasm for helping retiring business owners build a prosperous, successful life after business? Are they truly grateful for the opportunity to work with you? Does this person respect your achievements in building the business and seek to preserve its’ legacy of success?
Pairing a worn-out, frustrated seller with a mentor who is equally burned out, distracted, or just not that in to helping others, is a recipe for failure. You need a fresh pair of eyes focused on the most important transition of your life- not someone with a cynical, jaundiced view of things.
Any expert you hire to help you transition out of your business must be capable of crafting a workable blueprint for selling success that is the direct result of their own experiences and passion for business. They must be able to translate this real life experience into a plan of action that does not frustrate or confuse you. They must also be 100% committed to your vision of success, whatever that vision may be.
Remember, you probably only have one chance to sell your business the right way. It pays to plan, prepare, and partner with an expert on whom you can rely until the deal is done.. and after.