Make sure you answer the five basic Ws before putting your business on the selling block, commercial broker says.
By Spencer Tenney
Transportation business owners who achieve the most through a business sale are not luckier or smarter than others. In many cases, their businesses do not differ much from those of their peers.
So what makes them winners? Simple: Defined business sale goals and an expectation to achieve them.
A business sale or liquidation is inevitable for every business owner. If you want to maximize that experience, get serious about defining your exit goals. You can begin by simply addressing the “who, what, when, where, and why” of a future transportation business sale.
“Who” will purchase your transportation business?
If you plan to the sell or transfer the business to a son or daughter, what training, development, and experience will he or she need to take over the business? And when will your offspring be ready? If you will be selling to the open market, what processes and procedures need to be in place to give a new owner confidence in his ability to successfully take over the business?
Business owners often build not only a business but a legacy rich with experiences, relationships, and memories. Who becomes the trustee of that legacy when you sell your business is sometimes more important than getting the highest sale price. When business owners wait too long to begin the sale process, they have less control over who will buy their business. If you want control, proactively approach the sale process well in advance of when you might “need” to sell.
“What” do you want to accomplish in your business sale?
If your retirement will solely hinge on a business sale, it would make sense to find out what type of financial outcome will be required to secure your retirement funds. If your goal is to produce a certain amount of money to reinvest towards another business venture, you need to establish what the value of the business will need to be at the time of a sale to make it a reality. Discussing your goals with an industry transaction specialist along with a tax specialist will clarify what will need to happen for you to accomplish the desired results.
“When” will the sale take place?
I have read that a “goal is a dream with a deadline.” If you want to enhance the result of your business sale, determine specifically when you want the sale to take place and work towards that deadline. Otherwise, you are at the mercy of a multitude of financial decisions that can take the timing of a business sale completely out of your hands without you even knowing it. Investments in technology, fleet, and personnel are just a few that have enormous influence over the timing of a business sale. When business owners commit investments in these areas without addressing the “when” question, they often lose the ability to control the timing of their own business sale.
“Where” are you today? “Where” will the business need to be on the day of sale?
Winners in life and in transportation business sales don’t necessarily have all the answers to the many questions that will arise on the path to success. But they know without a doubt where they are today and where they are going. Clearly understanding your business value today and what your business value needs to be to accomplish your exit goals may influence the success of your business sale more than any other factor.
“Why” are you selling your business?
A business sale is an emotional process. Fear of change or losing what they built from scratch can obstruct business owners from realizing their transaction goals late in the game. Fear often interferes with rational decision making and confuses a seller’s priorities in life. Defining “why you are selling” and clinging to that reality throughout the process is what will get you across the finish line and allow you to achieve your transaction goals. If you are selling because you need more time with your family, or because you are concerned about your health, then such personal factors need to be the central focus of getting a deal done. Defining and clinging to “why you are selling” will allow you to maintain the perspective you need to achieve your transaction goals.
Being a winner in a transportation business sale is more than brains, luck, and market share. Do not wait to maximize your sale experience. Begin to position yourself for a successful business sale in the future by defining your transaction goals today. You can start by simply addressing the “who, what, when, where, and why” of a future transportation business sale.
Spencer Tenney, CBI is a senior broker at CHARLES TENNEY AND ASSOCIATES, a brokerage and consulting firm based in Arlington, Texas that specializes in transportation business sales and transactions. Tenney can be reached at firstname.lastname@example.org or (817) 274-0054.