(This article first appeared in the October 1, 2012 Convenience Store News email newsletter. Click here for the PDF version as it first appeared in the email.)
I am one of the most fortunate people in the world because my career allows me to work with some of the most successful convenience store operators in the country. Working with and around these successful individuals is not only insightful, but also invigorating when it comes to the world of business and entrepreneurship.
These individuals tackle the daily challenges of operating their businesses in stride, regardless of new regulations that are thrown upon them or the many vendor and employee issues that abound on a daily basis. They are very competent in what they do and probably, more than likely, are underappreciated by their peers and family.
Maybe it is because I am a former operator of stores that I have such a close relationship with these individuals. But one fact remains from all of my past relationships with these convenience store warriors — when it comes to selling something, they are reluctant to pull the trigger, especially when it comes to selling an underperforming convenience store in their group of stores.
After many years of working with hundreds of competent convenience store operators, I finally figured out what the problems are.
Reason 1: It is a lot of work.
Believe it or not, when it comes time to sell most anything and especially if it is one’s business or source of income, it is a lot of work. Before you can sell anything, you have to know what you are selling, meaning you will need all of the information that you would want to know before you were to buy the same item or business.
For example, if you were the buyer of a business, you would want to know:
- How much is it doing in sales and income?
- How long have you owned the business or when did you start it?
- What do the profit and loss statements say for the last several years?
- What do the tax returns look like and why are they different from the profit and loss statements?
- What am I really getting when I buy the business — real estate, equipment, etc.?
As you can see just from the few items mentioned here, it can be a daunting task to assemble all of the needed information in order to sell a business. And without a checklist and a coach, it just makes it harder. It is nothing like having to sell a car where the only thing that is involved is a car title and maybe a bill of sale.
Reason 2: It is stressful.
Do you know one of the top reasons for high blood pressure? You would be right if you said stress. Yes, stress is at the top of the list as the cause for many different sicknesses and most of the time, this can be avoided simply by planning and delegating.
In the selling process, it can get very stressful when a long period of time has been invested in the negotiating and the preparing of the needed buyer information only to have the deal fall through and you are back to square one. Sometimes, you are farther behind than where you started because of the time and distraction of the ongoing sale.
Most people don’t think about factoring stress into the equation of selling, but it is a very viable part of the selling procedure. With preparation and guidance, though, you can be prepared and reduce the amount of stress, if any, during the selling process.
Reason 3 : You don’t know the process.
Selling, when done properly, is really a staged process that implemented in the correct manner can reduce the stress of the situation and navigate the buyer and seller to the closing table. However, most people don’t sell complicated things like a business very often and so they don’t realize there is a process. They end up doing things in a haphazard way that causes them grief and confusion.
The key is to put together the right team of players who have experience in the field of selling complicated things like a business and are willing to work together. In the sale of a business, the team will need to consist of a business broker, an accountant and an attorney — in that order. With the team working together, they will complement each other and work within the process and ultimately get you the top dollar for your business in a painless manner.
Reason 4: It creates fear.
Regardless of what an individual is selling, there is always the fear that they are selling too low and thereby leaving too much money on the table for the next guy. So, how do you know if you are selling too low? Easy, do the research before you decide to sell your business and take it to the marketplace.
In today’s world, there is hardly anything that is private. People are finding out things about each other in a multitude of ways and finding out what a business like yours is selling for in the marketplace is not going to be very difficult in the age of the Internet. Plus, ask other individuals who may belong to the same trade association if they know of any recent sales that you can compare with. Ask a knowledgeable business broker if they have sold any businesses like yours and for how.
The main point here is all you have to do is ask around in a few certain places and you will have the range as to what your business should be selling for in the marketplace.
Reason 5: You focus too much on the price.
Generally, the first thing that comes into one’s mind when they are getting ready to sell something, especially if it as important as their livelihood, is what do they price the business at? What is the highest price I can get out of it?
Don’t get me wrong, but getting the highest price shouldn’t be your ultimate goal. No, what you should be focused on is how much do I get to put in my pocket when the sale is complete? There is a difference between the selling price and how much you get to keep.
All too often, someone will come up with a price, the buyer may agree to pay that price and only then does the seller go to talk to his accountant and gets a quick lesson in taxes. Oh yes, we forgot about the other partner that you have had all along, but neglected to include in the selling process. That partner, of course, is the “Taxman.”
The point is, before you decide to sell anything and after you have found out in a general manner what your business is going to be selling for in the marketplace, be sure to go talk with your accountant and have him or her run the numbers to see how much money you are going to end up with before you complete the sale. You may be surprised, and not in good way, to find out you cannot afford to sell, or there may be another way of selling that will enable you to put more money in your pocket.
Reason 6: You think you are Superman.
Most people do not like change. Instead, they want things to be constant and uneventful, and they delude themselves into thinking that nothing is going to change, everything is going to stay the same and everyone is going to live happy together forever and ever.
The truth of the matter, though, is that the majority of all people will have what we call a “significant life impacting event.” By that, I am referring to a death in the family, a divorce, someone getting sick with a disease, the increase of additional debt that would impact the business and one’s life, or a split in the partnership of a business relationship. The list goes on and on. It is generally no one’s fault, just part of the journey of life and we have to be somewhat prepared for it.
And that is what I am talking about. Being prepared and having a plan B in regards to some unforeseen event that may befall you or your family. That way, you don’t get caught and end up with the possibility of losing everything when with a little planning, things could have been prevented. Again, use your business broker to tell you what your business may be worth on the open marketplace, use your accountant to make sure all of the taxes are paid and there would not be any unknown taxes outstanding, and use your attorney to have plan of succession in place to keep the cash flowing in case you aren’t around.
Reason 7: You think you can do it on your own.
He who represents himself in a court of law has a fool for a client. I don’t remember who made this statement, but they were right on the money. The reason I say this is because everybody at one time or another has sold something. Some people have sold a lot of things so they think they are an accomplished sales person. Surprise! Guess what. You may have hurt yourself more than you know.
Why do I say this? Let me explain. It is very difficult to sell anything of personal value to someone else and do it effectively. Yes, you may get the job done, but I am talking about doing it effectively and here is why. When attempting to sell something of personal value you will encounter the following:
- You are too close to the deal because it is of personal value; therefore your negotiation skills are skewed. You will be thinking too much about how the outcome will affect you and not about the transaction.
- You will probably talk too much. Most sellers talk too much and either relay too much information to a buyer or the wrong kind of information to a buyer, thereby hurting themselves in the long run.
- You will take all criticism personally and possibly get defensive when in reality, the buyer is just trying to position themselves and see how you will react. For example, nobody likes to hear they have an ugly child.
- You are in an adversarial position from the beginning. Meaning they are the buyer and it is their mission to get the best possible price and sometimes they will even lie or try to cheat to get the lowest price. You are the seller who is trying to get the highest possible price and you want to remain on the ethical side of the transaction.
The solution is to hire an intermediary to do the negotiations for you. Even presidents of countries, baseball teams and large corporations all use intermediaries, so why wouldn’t you when you are wanting the best results. Remember he who represents himself has a fool for a client.