I’m sure I’ve used this line before but it’s so good I’ll use it (again) here. It came from a former client as we discussed the best time to sell a business.
“The best time to sell is one year before you’re burned out.”
Of course, it’s a trick statement because if we knew things like this life would be a heck of a lot easier, wouldn’t it? It got me thinking about it from two perspectives of leaving your current situation.
Business owners, and these are real-life examples from clients on why they’re exiting:
- I love the work, I love making sales, I hate managing people. I want to sell and concentrate on strategy and sales for the buyer.
- The doctor told me if I keep working, he won’t see me anymore because I’ll be in such bad shape, he won’t be able to help me. This after four surgeries for something preventable after the first surgery.
- A health issue gave me a wakeup call. I needed to slow down so I concentrated on getting the business ready to sell, which included grooming my GM, increasing productivity and therefore margins, and spent less and less time at the business. A PS to this, he says about two hours a day and I think it’s probably 50-60% (and we tell buyers this).
- The timing is right. A big player in the industry is making acquisitions, I’ve been at it over 30 years, and I need to “strike while the iron’s hot.”
- We know it’s time, after about 35 years. Still, knowing it’s time and moving forward are two different things. It’s a tough decision for these owners. It’s probably the biggest decision in their lives (other than getting married, having kids, etc.).
Burned out corporate executives needing to shed the corporate shackles:
- Career advancement has stalled. The corporate world is telling them they’ve plateaued. Stay here and you’ll be a middle manager for the next couple decades.
- They are sick of it. Don’t like the bureaucracy, politics, backstabbing, and lack of customer service simply to improve shareholder wealth (and bonuses).
- They’ve built their career around eventually owning a business. The corporate world gave them management and leadership skills and the capital to make the leap of faith into business ownership. All part of their master plan.
- Not exactly corporate executives but younger people who are chasing “Entrepreneurship Through Acquisition” (a new buzzword) without putting 20-30 years on the job.
- They’re let go. The company says, “Bye-bye, you’re part of our announced cost savings.”
Those in private equity have made a similar decision. Some join a firm to buy and run companies. Others create their own “Micro-PE” company so they can buy what they want. But the objective is the same, escape the corporate rat race and be in control.
Bottom line, it’s knowing when to get out of where you are and, most important, taking action.