Green Guides features a rotating panel of LCOs sharing their real-world experience on how to build and grow a successful lawn care business.
All business owners will someday turn their business loose in one way or another. The main options are: 1. The business is liquidated due to failure, death of the owner or other circumstances, often at a loss. 2. The business is passed on or sold to family members. 3. The business is successfully sold to another company, private investors, ESOP, etc., for a nice gain.
If you’re fortunate enough to survive those early years and eventually build something of value, there will come a time when you will want to shed the daily responsibility of owning a business, while taking some “chips off the table” in converting your paper equity to cash.
One never plans on going the way of option No. 1, but in reality that happens to many small business owners. Option two may be good for a few, but the reality is that only 30 percent of second generation family businesses survive, and only 12 percent make it to the third generation.
So in my case, while I love my sons and daughter, I did not want to try to beat those odds in passing my business of 18 years, LawnAmerica, to them. My hope was that they blaze their own trail in whatever they chose to pursue, and enjoy the journey as I did during my 31-year lawn care career and selling three different businesses.
So, I started to prepare my business to be sold over the last three years or so in order for it to be passed on to another party that would not only preserve the legacy of what we’d built, but possibly take LawnAmerica to another level in the future. And of course, I wanted to walk away with a financial reward of the many years of hard work and sacrifice.
In many ways, selling a good business you love can be more difficult than starting it. It’s your baby and there are many people you care about involved as customers and employees. It was important to me to take care of those people so that they would continue to be able to work at a great place.
“In many ways, selling a good business that you love can be more difficult than starting it.”
I found that many of the suitors for my business were more concerned about cash flow than the people who actually helped to generate the profits. So, lesson one is to look for a buyer who genuinely understands the importance of taking care of the people in our business and sees the value in what they bring to the business.
Lesson two in looking for the best suitor for your business is to find a company or investor who shares most of your core values, culture and processes. It’s never going to be an exact match, but there must be commonalities in what you do in processes and in your culture. Opposites may attract in some marriages, but not in most businesses.
Once you find a possible suitor and the relationship gets to the point of an actual offer, then it can become more challenging in many respects. Business owners often think their business is worth more than it is, and buyers do not want to pay more than what it’s worth … at least most buyers. I did not use a broker in the sale and negotiation of my business. In retrospect, I probably should have, considering the value and complexity of the business.
I did employ a broker as an advisor during the final stages of due diligence, which helped us solve many of the issues that will always come up in the due diligence phase of the sale.
Selling your business is almost a full-time job by itself, and can take away from your core responsibilities of continuing to run your business during the sales process. So find trusted people who can help you rather than trying to go it alone, as many of us bull-headed entrepreneurs tend to do.
You’ll only sell your business once, so you’ll want to do it right. I was fortunate to be able to successfully sell mine and to walk away, somewhat, as I’m still employed part-time for LawnAmerica. The buck just does not stop with me anymore, and at my age, that’s fine by me!