It’s the Christmas season – which for a lot of us is a busy time of gift buying, wrapping, and quality time with your in-laws. However, if you have the job of Programming Manager for the Freeform Channel (what a sweet gig) – this is when you book that trip to Maui. It’s basically an auto-shuffle of “Elf”, National Lampoon’s Christmas Vacation, The Polar Express, and of course The Santa Clause franchise.
I found myself scrolling the channels last night and stumbling upon Tim Allen’s version of Saint Nick. The bowl game that was on didn’t look very interesting, so somehow I zoned out on The Santa Clause – Part 1 (which should have been the only one made in my humble opinion) But I digress….
The premise is pretty simple to follow, even for me. Santa is on Allen’s roof, he slips and falls to his demise, leaves his coat behind, Tim puts on said coat, and voila – he is Santa Clause. In order to fill up a couple hours of screen time there are various hijinks that ensue, but that is the gist.
So here comes the metaphor. I wonder if sometimes as a business owner, you see this rough outline as a similar exit strategy for yourself. Albeit without the sleigh and reindeer, but you see where I am going here.
Assuming you have built a desirable business and that buyers will be lined up outside the door when you are ready to ride off into the sunset is a fool’s errand. That just doesn’t happen – and when you do get a call from an unsolicited buyer, they aren’t looking to buy your business at a premium – most of these offers are of the less attractive variety. They are typically looking for deals – casting their nets for sellers that can be pushed over and bought out on the cheap.
So back to our poor Santa Clause for a moment. Transitioning your firm to the ownership of someone else can be as simple as falling off a roof – but I wouldn’t recommend it. To realize a better outcome, start with a little planning. I’m not even talking about elaborate strategy here. I’m simply asking you to focus on 3 basic questions:
1. When do you want to be done? (Assuming you don’t fall off the roof)
2. What amount of money do you need AND want amount of money do you want from the sale of the business. These are 2 separate but related things. How much do you need to live your life after you are out of the business? How much do you want from the sale of the business? (ok, so I kind of crammed 3 or 4 questions into this one, but it’s all related)
3. Who would you like to sell the business to?
Once you have these answered, it’s time to look at your priorities within them. Is it most important to sell to the person you have been grooming for the role – even if that might mean leaving some money on the table? Is it most important to be done in 12 months - even if that might mean leaving some money on the table? Is it most important to pass the business on to children - even if that might mean leaving some money on the table? You get the idea.
Whatever the order of importance, it’s important to have an order (see what I did there?).
Leaving your succession to chance and assumptions looks a lot like falling off the roof and can often be just as painful.