February 23, 2024

You’re the Boss: When Words Get in the Way of Selling a Business


Putting a price on business.

I’ve been in love, some might say obsessed, with the written word for as long as I can remember. That’s why, as an undergraduate, I declared my English major as early as I could. At the time I believed that such decisions should be based entirely on what you love to do. I loved to read and write, so it never occurred to me that I would be anything but an English major.

A handful of people warned me that my English major might not be very marketable. “Marketable,” I remember saying, wrinkling my nose in distaste, “how can you talk about your personal interests in terms of sales jargon? Furthermore, why should I care?” Three years, countless interviews and two crumby jobs after graduation, the reason why I should have cared about the marketability of my degree became clear.

There is a similar disconnect between the language of entrepreneurship and the reality of selling a business. Let’s face it, there’s a lot of happy talk associated with starting your own business. We’re told to pursue our passion and follow our dreams. Employees start to feel like family, and you refer to the business as your baby. When you are immersed in the frenzy of the start-up phase, the business can become your life. After years of working in the business, the line between your own identity and that of what you’ve built becomes blurred, leading to the common belief that “I am the business, and the business is me.”

No one is ever discouraged from using this type of language to describe their entrepreneurial endeavors. In fact, it is celebrated on the covers of business books and magazines, and we are collectively buoyed by the triumphant messages. Then it comes time to sell the business, and the nomenclature of entrepreneurship collides with a new vocabulary — one with which it is completely at odds. What kind of people sell their dream? Who exits their passion, or cashes out their baby?

Last week I gave a presentation on exit planning to a networking group of 14 fellow small-business owners. While they were receptive to the ideas, the entire room agreed that I needed to call it something — anything! — other than exit planning. For better or worse, the term “exit” is synonymous with one of two things in a business owner’s mind: selling or dying. There I was — in a situation that has become all too familiar since I got into the business of selling businesses — engaged in a battle of words.

I’ve seen two different approaches used for dealing with these unfortunate semantics. One is to soften the language, presumably to remove some of the sting. A sale becomes a “business transfer,” while the more comprehensive exit process is referred to as “transition planning.” But this presents a marketing dilemma for those who offer these types of services. Even though not that many people know what an exit plan is or what a business broker does, coming up with new, friendlier labels just makes these niche services that much more obscure.

The other option I’ve seen borrows heavily from the language of the investment and financial planning community. For example: the business must be viewed as an “asset.” Business owners need to realize that these types of assets are “illiquid,” that the bulk of their “net worth” is tied up in one “stock” — the “equity” in the business — and they need to develop a plan to “diversify.” While we are all relatively familiar with the terminology, few of us have applied it to business ownership. It can be a long and difficult process to stop thinking in terms of dreams and start thinking in terms of liquidity.

Regardless of the language you use, it’s never too early to begin the process of mentally preparing for the day when you will leave your business. If indeed thoughts become words and words become actions, then perhaps it is useful to try thinking, and speaking, of your business in terms of a financial investment, rather than the air you breath. You cannot live without air, but if you’ve planned and prepared for it, you and your family may be able to live quite comfortably some day without your business.

Is there a better word for exit? I, for one, would welcome any suggestions.

Barbara Taylor is co-owner of a business brokerage, Synergy Business Services, in Bentonville, Ark. Here is her guide to selling a business.

Article source: http://feeds.nytimes.com/click.phdo?i=3512b3236f2be49f319b2b2ae4b9409a

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