The process of selling your business is a very emotional test for any business owner.  A business is a living creature that ebbs and flows daily with internal and external influences.  The challenge is to successfully manage this creature through day to day operations while going through the selling process.  It’s not just the time requirements but it is the emotional focus that I see owner’s have hard time with during escrow. 

Most entrepreneurs have a love/hate relationship with their business and it’s that emotional passion that makes them so attached to their business.  I have had my highest highs and lowest lows while running my own company and, when I finally sold it, I was mixed with relief and regret.  The personal challenge that I had, and most business owners I now work with have, is to stay focused on the business until the day you close escrow.

My advise to all business owners that if you are fortunate enough to get into escrow then run your business as if it will not close.  That’s right, not just close this time but never close.  Keep you head in your business plan, put a budget together for next year, hire employees as required and do whatever you would do as if you were to keep it.  This is not a head game or manipulation, it’s a fact.  Most businesses don’t sell, even though many get into escrow, so assume yours will not either.   The reality is that you have a better chance of closing by doing this then by pulling back and handing it over.

Please be aware that many, many escrows fall apart for all sorts of reasons.  Sometimes it’s financing, or due diligence, market changes, seller remorse, employees quit, etc.  The problem is that the seller often times emotionally leaves the business once it gets into a signed agreement and checks out of the race.  Taking a quote from my old high school football coach, “you need to give 100% or you’re going to get hurt”, the selling process is no time to sit back and think about what’s next.  Put your head down; give 100% to the selling effort and save the time to reflect after the game is over.

Here are a couple of samples I have seen with my clients where they lost focus and thus lost a deal.  Company A spent a year planning with their advisors and brought the full team (CPA, Financial Planner, Attorney, Consultant) all in to make sure that this transaction would be successful.  All went well, the business received a qualified offer and into due diligence the process went.  During the 4 month process the owner decided to buy a house in another state for their retirement, starting taking longer vacations (weeks at a time) and turned the control over to some key employees.  As you could image the employees (not thrilled about the sale since they loved working for the current owner) were not capable of managing the business.  The buyer backed out at the end and the owner now has upset employees, a business with it’s volume down and a house in another state they can’t visit.  All I asked was them to stay in for a few more months and then dream, but they couldn’t do it.  Unfortunately now the market changed and they still have it today for less value.  Ugh!

Another story is when I worked with a seller that had an accepted offer in hand and we’re going through a minimal due diligence review (one month tops).  During that time the buyer would go by the store to talk to the seller and found it closed during the day.  Not just once or twice, but numerous times during regular store hours.  My seller told me that she was looking to move after the close and needed to do “personal things” to get ready.  OMG!!  The buyer sees the store closed and potential future customers walking away because the seller was already emotionally gone.  Just guess how it ended?  Don’t do it, stay in the game until the check clears the bank and then go out and celebrate.

The moral to the story is always, always give 100% of your focus to the business and assume that it will never sell.  Then you have a much better chance of selling it and reaping the rewards of your hard work.   The worst case is that you still have a good business and the future is bright.  Consider the selling process a race and don’t stop running until you cross the finish line, and I mean not one second sooner!  Good Luck!       

This entry was posted on Thursday, November 19th, 2009 at 10:00 am and is filed under Strategic Advisors, Selling a Small Business, Sell Your Business, Exit Stories, Emotional Selling, Exit and Answers, Buy a Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.