Almost all of us who are entrepreneurial and establish personal service firms have been or are heavily involved in struggling to make the endeavor successful and warding off disaster. However, many of us will also achieve a position of success we’re not as prepared to handle: "Do we sell a part or all of our business?"
Reasons behind the decision to sell
Most of us are refugees from larger companies, and we’ve chosen entrepreneurship to escape the politics, monotony, and blandness of organizational life. These are life objectives, not business objectives. Consequently, any decisions about the destiny of our practices become decisions about our lives, not merely our professions.
Surrendering control, in part or in whole, is a traumatic experience. The “sweat equity” has been ours. I’ve found that the best reasons to consider that surrender are:
- Overriding personal objectives, such as the desire to spend more time with one’s family, on hobbies, traveling, and other diversions.
- Health concerns that mitigate against continued travel, stress, or long hours.
- Boredom with the business, and the desire to try something new.
The worst reasons to sacrifice total ownership include:
- Financial pressure caused by poor sales.
- Funding desired for new projects or expansion.
- The lure of a “big name” with which to associate.
- The need for professional companionship.
Consider your personal needs
The first three bullets above represent legitimate lifestyle decisions that must be achieved or avoided through a different business structure. The last four bullets represent business dynamics that have other possible solutions, short of selling equity.
For example, try to arrange financing through a home equity loan, investment from friends (silent partners with no involvement), or a more modest lifestyle; fund new products by partnering with clients who will get the product for free in return for their investment; form loose alliances if name recognition is so important (or, better still, stop worrying about it); and, if you need companionship, get a dog.
Most people who sell their businesses outright, despite all the promises and inducements, simply wind up as someone else’s employee, adhering to expense account procedures, travel restrictions, and company holidays. Those who sell a major part of the business to active partners are now supporting at least two sets of personal objectives: their own and the partners’. And those who seek venture capital are swimming with sharks who will demand total commitment, minimal personal reward for the “owner,” maximum return on the investment, and eventual sale of the future, more profitable business.
Determine why you’re considering selling your business. If it’s for personal fulfillment, then proceed with the options; but if it’s due to business pressure, find other alternatives. The grass is seldom greener, and it’s often not even grass.
Alan Weiss is the founder and president of Summit Consulting Group, Inc., a firm specializing in management and organization development. Summit's clients include Hewlett-Packard, General Electric, The New York Times, Mercedes-Benz, Coldwell Banker, and more than 80 other organizations in four countries. He advises executives and consultants on business objectives and personal goals. He has also written 13 books, including the best-selling Million Dollar Consulting: The Professional’s Guide to Growing a Practice. Subscribe to his newsletter, “Balancing Act: Blending Life, Work, and Relationships,” by sending an e-mail to: mailto:firstname.lastname@example.org.Copyright 2000, Alan Weiss.