Would you sell your successful business?
Let's say you started a small business about 15 years ago. You started it from the ground up almost entirely by yourself and after years of hard work you now have a very successful business model that is considered to be quite valuable. You make about 75,000 bucks a year on average that is pure net profit.
The only downside today is that you have to run the place by almost entirely by yourself. You write the payroll checks, you pay the bills, you send in the tax info, you talk to the customers and accept/produce new/completed projects, you travel out of town for parts and delivery, you pick the insurance plans, you handle the marketing (which is not very aggressive, but still exists), you manage the labor crew (3-5 guys that do the labor jobs that you don't have to handle yourself; basic areas like mechanics, electronics, body work, etc), and you handle just about everything else administrative-wise. After years of working 60+ hours a week, you are feeling a bit worn out and looking into plans for how to reduce your workload and stress levels.
You have two options as of now that I want to discuss....
1.) Sell the business to an eager buyer (there is one ready and willing to write the check) for a large lump sum profit and get a job as head shop manager under the new owner. You no longer have to worry about any business decisions and can run the floor with more peace of mind, allowing you to focus on the work that brings in the money and nothing else. You are paid a salary which will more than likely not be as much as you were making before as sole owner, but, you will work less hours and be under much less stress. But, most importantly of all is the fact that you will not be owner anymore (duh). You won't get company profit or have any say in business direction, plans, or decisions. You will no longer be your own boss.
2.) Remain the owner of the business, and, instead of selling it, hire a business master (MBA) to take on the role of leader in all of the areas that you do not wish to handle alone. You would still be head shop manager and be able to focus on the labor and projects, but, you would no longer have to worry about the other business aspects except for giving your approval on various numbers, strategies, customers, projects, etc. It would cost money to employ the MBA, but, you would eventually make enough money to pay for him and still bring in additional profit by encouraging them (the MBA) to expand your business into a 2-3 location local franchise and make 2-3 times as much money as you were before. The MBA's primary goal right off the bat would be to take the capital you have already after 15 years of hard work, and use it to expand your business in a safe, smart manner that would not be risky since your current model is already a success that could easily be expanded if provided with a new, good location. It's also safe because since it's such a small business, you would be able to keep a close eye on things and work with your MBA every step of the way. All major decisions would require your final approval before being implemented, and your numbers would always be right there on file for you to check.
So, what would you do? Sell your family business and work for the new owner? Or, keep the place and hire some business muscle to improve it and take some of the work load off of your back?
Also, the second option is theorized by me, and I am not a business major (I'm poli sci, actually). Does it seem to make sense as far as a definite business possibility? Am I going about it the right way? Meaning; would hiring a business major be the best route to expanding my successful company in the shortest time possible? What am I leaving out? What should I add to the second option plan to make it more realistic? Is their a cheaper solution that's equally fast? If yes, what is it?
I would greatly appreciate answers from people with business experience, or at least people with a business degree (or a degree in a related field like econ, finance, even applied mathematics) or on their way to getting one in college. That would prove most valuable. I will be checking on answers within the hour and voting on the best one.
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- A HunchLv 79 years agoFavorite Answer
SELL, SELL, SELL....
I can't wait until my buisness is successful enough to SELL = to me this is the mid-7figures.
When the people on shark tank are offered 75% of the because they are bad operators, I scream "TAKE IT".
1. when you sell the busienss, you take the lump sum and you take the "consulting money". You don't go to work hardly ever. If the person buying the business is not doing this deal, they are a very good manager. And if you think it is good to stay under someone else, you are crazy.
- The people never know who to report to. You, the former owner, has trouble cutting ties.
2. You don't to employ an MBA. An MBA just means they went to school and got a degree (I got one of those already and it's really meaningless like any degree, it just depends on how you use it). As the owner you can never be just in charge of the shop. This is your business. You provide direction on all aspects of the company. You can hire a business expert, doesn't need to be an MBA, it to be someone with business expertise in your industry. That person can evaulate and suggest but you are the owner and the one that makes final decision.
- also do you understand what a franchise is? Is this really what you want to do? It seems like a lot of work for a few locations. A franchise is opening a completely independent location that is 100% owned by another person. That person pays you, the franchise, for training, franchising materials so it looks like one company, etc. I think you mean just opening multiple locations.
You don't have to be a "business major" to understand how to run a business. I have a BA in Psych (woo hoo almost as useful as a PoliSci degree) and a masters in Organizational Behavior. I don't have tons of accounting background but I know how to run a business.
My boyfriend went to college for 1 week (until he realized that you have to actually go to class and by books). We are in our 30s, his company's sales are in the 7-figures annually. He doesn't say "I don't know how to run a business, he just runs a business....
If you don't have the desire to run the business, sell.
But based on your other questions, are you even skilled enough to determine a fair market value of the business? Do you need to hire a company to do this?
- 9 years ago
The person thats going to increase your profits isnt going to accept peanuts, Top business minded people like me wont accept anything less than six figures to double or triple your profits. Someone who can do that is more than likely to just concentrate on his own business and keep 100% profit.
You need an assistant to help with the workload, if i were you i would find a family member or close friend.
Your other option is to get all your savings from the sale of the business and be a shareholder in a top company like Apple, they will pay you dividends per year, all you do is sit back and invest. Perhaps a few different companies.
Another thing to consider is if you sell you will no longer be making the 75k per year, you will be on 0. also from your question i have a feeling you have incorrectly estimated the gross net profit.
You are over rate education, thats very foolish of you.
- Anonymous4 years ago
Why do you need to promote the whole thing?? I'm guessing your relocating too some distance to go back and forth for your corporation, however as you state you each have headquartered lives - then I'm additionally guessing your relocating into his condo as an alternative than purchasing one in combination. So cannot you seem at your exchange choices - hire your condo out - that manner it's there for you if the connection breaks down. I recognize that is complicated industry on this economic climate however individuals nonetheless want residences, and also you would keep in mind renting to dss as you're assured hire from the advantages workplace. As for your corporation, you did not state what your corporation used to be, however cannot you probably appoint anyone to run your corporation for you so its nonetheless there and nonetheless offering you with an sales! If you do it that manner, you're no longer promoting or giving up the whole thing for this courting and it's continually there so that you can go back to in the event you so want. You under no circumstances recognize - year down the road, you would wish to promote and make your transfer extra perminent! Take a threat on love, simply ensure you shield your self within the approach :)