Two weeks ago I was in Dartmouth, NS talking with the commercial loan officers of Atlantic Canada’s credit unions about business valuation.
At the end, I got a question from the floor about succession planning. ‘Does it make sense to sell a business to an employee?,’ asked one of the attendees.
I know you’re going to hate this but, it depends. Watch the full story in this video: https://youtu.be/ODZF3gTeETc
In well organized, maybe larger businesses, managers have well defined roles and responsibilities. They manage their own business plan and make decisions about resources and employees. It’s up to them to perform and they’re accountable for what happens.
This type of person may be able to transition into entrepreneurship.
In many smaller businesses which are ‘technician run,’ to borrow the terminology from Michael Gerber’s E-Myth book, it is not so easy.
These small business operators keep most of the strategic procedures and policies in their heads and ALL the responsibility. Sometimes a long-time employee who is really great at handling a long list of complex TASKS is given the title of ‘manager.’ This doesn’t actually make them a manager.
I’ve been involved in two such successions and both buyers failed after about two years. They were never the right candidate to weather the stress involved in business ownership.
Most importantly, however, they didn’t have the drive and ambition. If they did, why were they still working in someone else’s shadow for all those years?
Most business owners want to try to find a buyer on their own. 80% of small businesses are sold in the private market and mostly because owners don’t want to pay any type of commission to a broker.
So who do you look for when you need to find a buyer?
Try the ones who got away. The good employees that you hated to lose because they knew the business and were really capable. The ones who left because they wanted more. These are the people with ambition.
If you want to learn more about how I help business owners sell their own business and avoid paying a commission, check out www.HowToSellMyOwnBusiness.com
There are plenty of FREE resources there to help you begin planning your transition out of your business.
Please remember to like and share this article, it’s the only way the people who run the internet have of knowing if the content is any good or not. The more you share, the more likely someone who needs this information will be able to find it.
If you would like to hear from me weekly before anyone else, you can sign yourself up in the form to the left of this post.
Improve your business each and every day, download my FREE daily cheat sheet and hang it in your work area to keep yourself focused. https://gum.co/15Questions/FREE
Do you live in Toronto? I’ve got three workshops coming up for Toronto in September. Book now to get early ticket pricing. http://davidbarnett.eventbrite.ca
Thanks and I’ll see you next time.