Author Topic: 10 Years In - Now Trapped  (Read 663 times)

oneyear

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10 Years In - Now Trapped
« on: February 06, 2019, 01:02:43 PM »
Hey everyone, hoping for some advice from someone who's supposedly "made it"

This year marks my 10th year in business. Starting from very humble beginnings in our back bedroom, I worked from a laptop and a phone building our business. Today we are a team of 35 plus an off shore network of about the same. Home paid off, I'd say FI (but a OMYer) and a business worth $2m (my share is half). Business is booming but the challenges of running a business of this size, plus being a member of the FI community, has me wanting out. In the past year we've had 2 potential purchases, one almost across the line and the other stopped early in negotiations as the purchasers want me to stay on for the long term. This was the deal breaker. As a result I'm a year further down the line with no plans to sell as the process is far too draining.

For those starting out in business, the stress you feel during start up is matched and more when trying to sell and run the business at the same time. The past year has drained me and we have 70 families that depend on the business for their own lives. I know this shouldn't be my main focus of concern, but it is. One of our team is moving to a new job and it struck me that I am literally trapped in my own business. I couldn't leave if I wanted. Or I could but it would risk a very sizeable pot.

Now before you get all teary eyed for me, we spend a month abroad each year, we have multiple holidays on top of this each year and I'd say our best experiences are the times we spend as a family. My daughter is 3. Life is good.

My questions are for those who've sold businesses they built from the ground up. How did you get out? How did you make yourself "not the oracle"?
How did you manage the process of selling and running a business. How did you disassociate your identity as the business owner after selling?

Sorry fo the pity party guys. Being the boss is a lonely place to be.

BicycleB

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Re: 10 Years In - Now Trapped
« Reply #1 on: February 06, 2019, 01:50:39 PM »
While waiting for the expert commenters (I'm just a schmuck with a hobby of business-related reading):
1. Good luck!
2. I've read books/articles who agree the issues you're looking at are key.
3. Specifically, if you don't want to keep working there, you get a better price if you've trained everyone so that you're not needed any more. Buyers usually prefer a turnkey purchase.

Ideas:
a. make sure the leaders who will be in charge if the business basically runs itself have the knowledge needed to lead
b. give them decision practice intentionally.
c. practice probably means advising less, staying calm while they make mistakes
d. maybe let them make all decisions for a year, but just tell you each week the decisions they sweated over and why they made them?

Questions:
Is your partner on board with selling too, or will they stay?

Are you the Big Boss while the other partner is silent?

You've probably seen stuff like this, but would the discipline of following checklists like these help?

https://www.intouch-marketing.com/blog/how-to-prepare-your-business-for-sale-and-get-top-dollar/

https://www.ey.com/Publication/vwLUAssets/EY-Preparing-your-private-business-for-sale/$FILE/EY-Preparing-your-private-business-for-sale.pdf
« Last Edit: February 08, 2019, 11:41:31 AM by BicycleB »

nara

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Re: 10 Years In - Now Trapped
« Reply #2 on: February 07, 2019, 08:38:26 PM »
Oh boy can I relate!! I started my business 8 years ago as a solo entrepreuneur. Nowhere near your size currently but we have 7 FT employees. I feel so trapped. I don't know how anyone gets out. We have 1.7 years remaining on our commercial lease. If I'm able to sell the business before this time then I will be FI. However, I expect that any potential buyer would expect me to stay on as well. If I don't sell the business--I will have to figure out how to close up shop and will walk away with nothing other than the money earned from our years in business. We haven't received any offers yet, but we did have one potential buyer fly out...which made me think this was serious. He told me to get a lawyer who specializes in the sale of healthcare businesses and that he would send out the proposal by the end of the week. I put down $3k on a retainer for a lawyer and notified the accountant. No proposal ever came. Everything about owning a business sucks. Sorry I can't offer advice, but I get it. I am looking forward to that weight that feels like a permanent part of my being being lifted one day and how that might feel.
« Last Edit: February 07, 2019, 08:42:14 PM by nara »

oneyear

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Re: 10 Years In - Now Trapped
« Reply #3 on: February 08, 2019, 09:54:27 PM »
Thank you for your messages, really good advice all round. I've put some notes below and its a great exercise for outside looking in review. Thanks

Ideas:
a. make sure the leaders who will be in charge if the business basically runs itself have the knowledge needed to lead
b. give them decision practice intentionally.
c. practice probably means advising less, staying calm while they make mistakes
d. maybe let them make all decisions for a year, but just tell you each week the decisions they sweated over and why they made them?

These things are what I'd call in motion. Staff changes recently means we're all back in fight mode trying to keep on track for our ambitious targets

Questions:
Is your partner on board with selling too, or will they stay? He's happy to sell too, but any new purchaser wants continuity of work

Are you the Big Boss while the other partner is silent?50/50 share and workload, I founded the company solely

You've probably seen stuff like this, but would the discipline of following checklists like these help?Yeah I'm pretty organised with checklists and reminders

I feel so trapped. I don't know how anyone gets out.

This, our business is profitable, well known for its reputation, but the process of removing myself from the business is extremely daunting. We've been going down this process for 2 years.

Thanks for all your messages :)

skiersailor

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Re: 10 Years In - Now Trapped
« Reply #4 on: February 09, 2019, 08:37:33 AM »
Do you have any employees who are qualified to run the business without you and who you think would be responsible and motivated owners?  If so, you might consider selling the business to them.  If they don't have capital to invest, you could finance the sale with the future earnings of the company - although that would involve additional risk.

For example, you might grant them stock in lieu of bonuses, and eventually the company would buy your shares with cash and/or debt.  Rather than being an owner, you would then be a creditor with a payout over time.  You could stipulate that as long as the debt is outstanding you remain on the board of directors so you retain some control over operations, the hiring/firing of management, management compensation and shareholder distributions.

An ESOP can work similarly, and may have additional tax advantages.  ESOPs have ongoing administrative costs and require the involvement of a trustee.
« Last Edit: February 09, 2019, 12:03:00 PM by skiersailor »

dayzero

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Re: 10 Years In - Now Trapped
« Reply #5 on: February 09, 2019, 09:03:32 AM »
I sold a few years ago and will be wrapping up my retention period and retiring later this year. Unless you have a buyer that is effectively acquiring your customer portfolio, I can't imagine another circumstance where they won't want you to stay on. Put yourself in the buyers position, under what circumstances would you acquire a business that someone else has built without requiring them to stay to help make the transition into your hands? I have never heard of less than a three-year commitment and four years seems to be the standard. Except, as I said, in cases where the buyer has no interest in the assets being acquired but just wants the customers. My advice is to just take a deal with a retention holdback, negotiate as much as you can up-front, and try to enjoy the transition period as much as you can. Your could try to find a deal where you are happy with 80% of the purchase price and negotiate that amount into the first two years, then walk away from the final 20%. Mine was structured as:

Closing: 40%
Year 1: 60%
Y2: 80%
Y3: 100%

Have you considered selling to your employees?

feelingroovy

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Re: 10 Years In - Now Trapped
« Reply #6 on: February 09, 2019, 03:10:32 PM »
I am also 10 years in to business ownership an 3 years ago felt much as you do. Very burned out (but less successful).

I have been spending the past few years pulling myself out of the operation so it can run without me. This has required hiring, setting up processes and even changing what we offer.

It's a slow process and I am still not out and the business is not yet sellable. But I am enjoying it a lot more and no longer feel stuck. I found some of these books helpful.

https://www.amazon.com/Built-Sell-Creating-Business-Without-ebook/dp/B004IYISQW/ref=mp_s_a_1_2?ie=UTF8&qid=1549750022&sr=8-2&pi=AC_SX236_SY340_FMwebp_QL65&keywords=built+to+sell

https://www.amazon.com/Sustainable-Creating-Personally-Economically-Aardvarks-ebook/dp/B07954X6K7

https://www.amazon.com/gp/aw/d/0525534016/ref=dbs_a_w_dp_0525534016

moneytaichi

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Re: 10 Years In - Now Trapped
« Reply #7 on: February 10, 2019, 09:30:04 PM »
A couple of ideas that may help:
  • Consider to take some restorative time off just for you. I am not talking about multi-week overseas adventures with your family. It sounds like you are on the edge of burn-out so please be careful not to push yourself on anything else. This is my personal experience too. Your top priority is to take care of yourself because the future of the business depends on you. Once you are back on your feet and feel centered, it's much easier to negotiate an exit plan with potential buyers.
  • Hire a business consultant or coach to help you slowly create a business that doesn't depend on you so much. SCORE.org has experienced volunteers who had similar experience as you. They can really help.

Good luck!