When Should You Sell Your Business?

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When Should You Sell Your Business?

When Should You Sell Your Business? With Jan Cavelle

Sean: I want to dive in a little bit deeper into that because this happened with me and my business. I’m pretty sure this happens to all business owners who came from startups who went to scale up and went ahead and scaled up their business.

Sean: What did you say to your people, the people who started out with you? You were about to hire a senior-level person from the outside. What did you tell them? What did they think about it? Were they asking you about this person’s position in the hierarchy? Were they challenging your decision during that time?

Jan: I think, yeah, I mean, we went back and forth with existing people because, you know, on the one hand, they were saying, “Oh, OK, you know, I love the business, you know, so I’ll do it. I don’t really want to, but I’ll do it.” Which, of course, is fatal because, you know, if it’s not for them, there’s nothing wrong with it, not being for them. But having somebody who doesn’t really feel in their hearts doing it, it’s never going to work, but equally, they are terrified you know as we have said, something from the outside, and trying to say it in work – “you didn’t want to do it.” So you know, “your heart’s not in doing it, so it’s got to be somebody from the outside.”

Jan: You know, I think that very quick charge felt open-minded. But the moment that an outsider makes a mistake, which is fine if they do, then it’s an “I told you, you don’t like them from day one.” Well, you know, so it’s tricky. But I think it’s both investments. I think you’ve got to get the – and it’s not your job as a leader.

Jan: I think you need to take that person on very slowly. And allow them lots and lots of time to settle in and build that into your finances. Because I think what we tend to do is panic hire even at the senior level. And “oh the business is picking up. So I need to expand,” you know when actually we should be saying “oh the business will be big enough in six months. So I need to look more and you know if I find them now fantastic, but I’ve got six months to find them.” And then probably another six months to be up and running and make it really clear to everybody that, you know, they’ve got three years, four years experience of business already.

Jan: So it’s only fair to expect this new person to need six months to settle in. It’s a terrible mistake to expect them to be up and running on the first day, which of course, people tend to do. I think it’s about expectations.

Sean: That’s amazing.

Sean: And one of the things that we discussed early on and you answered early on is that people have defined why you want to do what you do. So in your case, in your first business, you mentioned that it was propelled by, you know, you’re being a mom and you have to provide food on the table. What about after that? How did you find out why you wanted to do these things? And how did you communicate that to the rest of your people so that they have it in their hearts?

Jan: Well, I went through various stages. I went through this sort of early, I had to put food on the table stage and when my children were young. And then, later on, they were finding their own way, quite rightly, as late teens do, and they drifted in and out working for the business. And my son particularly settled for a while working for me.

Jan: So I more for a bit and thought, this is a family business, that I’ll hand-on. And actually, it was at this, I mean I think it was probably about when we had 40 other people. Neither of us are enjoying it, but neither wanted to tell the other one.

Jan: Eventually, I saw how unhappy it was making him, and I said, you know, you’ve gone off to your thing, you know, you’re only 23 or whatever he was by then, you go off and have your own life. And that was great. But again, it meant, you know, “Oh, well, now what? Because it’s not for the kids when they’re small, it’s not a family business. Why am I doing it now?”

Jan: And I taught myself that all is good, so this is to look after my old age, you know, and this is sensible and work. Yeah. And actually, none of that is really enough. It wasn’t for me anyway. I wasn’t ever born and sensible about looking after just me, you know, the people have to be terribly on board to keep you in, you know?

Jan: And I think I should, in fact I know, and I’ve said before, I probably should have got out much earlier. Not maybe when my son left, actually, and because it didn’t, it lead to very “Oh, why am I doing this? I’m not very happy doing it.” years towards the end. So, all but front with me.

Sean: Well, you know, a lot of people go through that when times get tough in business, we look into ourselves again and we wonder. “Why am I doing this again? Why am I going through all these hard things, dealing with these difficult people in my team and in my client’s list?” So what happened then? How did you get to realize why you still want it to go on?

Jan: Well, increasingly I didn’t and I think, you know, the moment you get to that stage, word gets around. So, you know, you start to get approached by all sorts of VCs. And, you know, out of all the businesses who were under various pretexts, you know? And it was a really interesting one because, of course, it’s a very sort of shark-infested water and very male-dominated too.

Jan: So nearly all of them come in and say, “Well, you know, you’re having a rough time and you know, you’re having problems, but of course, you want to because you’re a woman.”

Sean: That’s not nice.

Jan: It wasn’t the very best way to get on with me actually, there was probably a certain amount of research in manufacturing. But it was a very tough gig for women. But no, it was hard, and so I got some office on the business, you know, so shall I or shouldn’t I, pulled out at the last minute, you know like many people do and that’s your baby is sensible. “Oh, my goodness, what do I do if I don’t have this too?” comes into it.

Jan: You know? So I wasted some years actually, to my anger, I should have taken the first offer. It was the best offer and it would have been the best for me – “argh, damn it.”

Jan: But I didn’t anyway, and in the end just got to the pitch and I thought, you know, “I really, I cannot. I was getting so ill with them, you know, I just can’t do it.” And somebody wants to take over the brand, the people that didn’t want the actual unit because it was too far from them, it was a competitor. So we just made a deal, you know, within a couple, literally a few weeks. I think three or four weeks took it far. And it was just done, you know, and I thought I would really regret it.

Jan: But by that time, I woke up and I thought, This is wonderful. I am so pleased. Why didn’t I do it five years ago? And I think a lot of people say you should get out before going too long, too late in your business when you’ve seen it all before, and it gets that pitch at your signature before. It’s definitely the time you should get out, because it just doesn’t do it for you anymore.

Sean: Very interesting to hear, and I’m so happy to learn these things from you. I’m not there yet. Maybe someday I will be. SEO-Hacker is very young. We just turned 11 years old and started it when we were 22, now I’m 33. Yeah, it’s all by God’s grace. Very blessed to have this business like you. I didn’t start out with a lot. It was like sixty-something US dollars. That’s my capital and I just started this website. Yeah.

Jan: What can be done? I hope your listeners take note of this. Honestly, I say not everybody has to be a tech unicorn, you know?

Sean: Yeah.

Jan: Look at what you’ve done. It’s amazing.

Sean: Thank you so much. And I’m learning a lot. I am reflecting on that, you know, on what you said about exiting. And I definitely later after this recording, I’m going to be thinking more about that so that in the hopefully far future, I have a lot of things that I still want to do still with the business, but I definitely need to plan ahead.

Jan: Oddly enough, it was something we covered in my book. I spoke to the person who made that first half of my business for some wisdom to put into a book budget. And that’s an entrepreneur culture Jimmy Harbour. And he argues that every business over about 500,000 UK pounds or even dollars turnover, should actually start thinking, “I need to be sellable this anytime” because we never know what life’s going to throw at us. We never know which morning we’re going to wake up and say, I don’t want to do this anymore, you know, or something and life’s going to change or you’re going to be ill, God forbid. But you know, if you were or whatever, you know, and if you are actually sale-ready all the time, then you think, Oh, nice moment, jolly good, you know? And it doesn’t matter.

Jan: And all the things you do to sell anyway are very good for your business. Putting in wide systems, keeping clean accounts, you know, maximizing value by small – you know they all make sense of a good business. So I think that’s a really important thing to bear in mind. Just make sure you’re sellable any day you fancy.

Sean: What does ‘maximizing value’ mean?

Jan: Well, I think you know, you’ve got to – it’s particularly gross actually. You get very easily seduced by, you know, like you were saying about metric being people, you know, it’s easy to be impressed by turnover, or a number of staff, or whatever, or accolades, or awards, or all the things that other people say.

Jan: But actually. What you want to walk away with is money in your pocket, you know, and that comes down to making sure that business has a really, really good bottom line. And it’s very easy to lose sight of that in gross, you know, we can’t all afford to be Uber and start making a loss.

Sean: For sure. For sure. So it’s not about all of the other metrics, it’s about what the business is making – bottom line. What other things, and I’m sure when you were preparing to exit and sell the business, there were hiccups along the way that you didn’t see. What were some of the things that your potential buyers asked you to fix up before you were able to finally exit?

Jan: Actually, in the size I was, nobody really was vaulted. I think you have to get too big of what I was before people are looking for a sort of Reggie Tong beauty of a business. You know, I was still in, you know, at that spot or moment, I was still in scale upstage and they could add as experienced business buyers and sellers, you know, they could add so much to the bottom line, which in my ignorance, I wasn’t doing just by, you know, maybe some mergers and acquisitions or, you know, all sorts of businesses stuff. But I was still probably quite afraid to do.

Jan: People like that can change your business value in seconds and in those early stages. They kind of look like they’re buying a vehicle to apply their expertise as much as anything.

Jan: I had one in particular who I was so convinced about the mail saying he sold, providing we were made for women from the top of the business. You know, it didn’t matter. The business was going to flourish, but that’s his argument, you know, that’s a London-based VC. But on the whole, you know, people who buy and sell businesses know what they’re doing and know how they can increase the value and then sell the business on, very few of them are buying to keep it.

Sean: That’s very, very good stuff. And Jan, you know, thank you so much for this time that you have given us, for all the wisdom that we learned from you today. And I just want to know if people want to know more about you, they want to ask questions, where’s the best place for them to do that?

Jan: Absolutely. Anybody that has a question, please don’t hesitate to get in touch with my email. You can get all my contact details on my website, which is jancavelle.co.uk Yes, there’s a page to buy the book with links to us as well, but also my email address is there or contact for us. So please don’t hesitate to get in touch.

Sean: Thanks so much, Jan. There you have it, guys. We will have these links in the show, notes, her book, her website, her LinkedIn as well. And Jan is a business coach, and if you have questions on business, please do get in touch with her. Ask her these things, because what you guys are doing, it’s a noble calling business is a noble calling, and doing it right is very important for you, for your people, for the economy. Jan, thank you so much for being here. We are better for it.

Jan: My honor and pleasure.

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