For some time, when I was a little girl, I was an avid horseback rider.
I started horseback riding lessons when I was about seven years old. And after a few years of persistence and dedication to riding western dressage, my parents decided that I had earned the chance to have my own horse. I was ecstatic and proud that all of my hard work had finally paid off.
I remember the excitement I had when I went to a local feed and tack store and picked out my own gear for the first time. I wandered through each aisle, swinging a big red empty bucket and practically jumping for joy every time I placed a new item in the bucket (all in the same matching shade of cotton candy pink, of course).
Everything changed when my mom decided to start her business.
Suddenly I was told I couldn’t have my own horse after all. The big red bucket with the pink halter and leads went back to the store with the receipt.
Then I was told I had to cut back on my lessons, too. My parents told me it was a sacrifice we needed to make so we could support her new business and help get it off the ground.
I was frustrated and disappointed. I was also 10 years old.
Who wouldn’t be upset at that age when it’s almost impossible to understand the many sacrifices that everyone involved has to make to follow or support the dream of owning a business?
Since then, I’ve watched my mom put blood, sweat and tears into growing her business. Now that I’m an adult I see her sacrifices differently. I have no words to describe how much I admire and respect her grit, determination and courage to take a leap of faith in pursuit of her dream.
While she hasn’t sold it yet, it’s a joy to watch her move one step closer to that ultimate goal every time she wins new business or grows to a new level.
If you’re a business owner yourself or someone in your family owns a business- I’m willing to bet you can relate to some part of my story (especially the many complicated emotions and the sacrifices that come with business ownership). In the end, the hope is that all of it will pay off when the time comes where there’s an opportunity to sell.
Selling a family business signifies true success- a dream fulfilled that may very well span multiple generations.
It’s a dream shared by many, considering [The Institute for Family Business Research Foundation] found that there were 5.2 million family-owned businesses in 2019, 86.2% of the total private sector businesses in the United Kingdom.
But successfully building, running and selling a family business is not just about the numbers.
Just like starting a business, it can be grueling and require sacrifice that may even create heartache and ruin relationships. How will your family feel if their role within the business changes? How will the sale impact their individual career paths or how they support their partners, spouses and/or children?
Then, how do you navigate the stress of the actual sale? How do you manage completing an evaluation, deciding which seller to choose and figuring out how to smoothly transition ownership all while maintaining good relationships with your family and loyal customers?
First, take a deep breath–or several.
Then decide why you’re hoping to sell, and determine if you truly have a good reason to sell your family business.
Reasons To Sell a Family Business
1. Ownership or leadership issues
Family business owners sometimes make the mistake of filling too many leadership roles in their business with other family members. Why? It’s often easier to trust your own family than waiting for someone outside of the family to build trust over time. And it's natural to want to give your family the best opportunities to grow the business when they arise.
The problem is, just because you feel you can trust a family member doesn’t necessarily mean that they are a good manager or leader. Think of your fun but slightly distracted and disorganised uncle Andy. Do you really want him running your scheduling and dispatch? Or what about your mother-in-law, who’s great at keeping the family on time for Sunday church, but horrible at splitting the check evenly at breakfast after? Should she be in charge of your books?
Family members in the wrong position are bad for your business and can also cause tension between them and your whole team. If they consistently underperform in their role, especially if they are supervising other members of your staff who aren’t part of the family, you can find yourself in the difficult position of deciding whether to keep them employed.
In some cases, a successful sale of the business to someone outside of the family can naturally resolve this conflict as the decision about who stays on and who leaves will largely fall on the new owner.
But of course, this is an ideal scenario, one that rarely plays out the way you hope. Your brother-in-law Bob or cousin Jane might still refuse to respect the new owner no matter how much you involve them in succession planning and the transition to new ownership.
Remember, though, that you ultimately cannot please everyone. And it’s vital that you encourage your family to support what’s best for the business, even if it goes against their personal opinion.
2. Family issues
Let’s face it, it’s hard to separate your personal life from your professional life. For families running a business together, morning coffee and croissants can go from calm to chaotic when you start talking about profit and loss with your spouse instead of the headlines in the morning paper.
As the business owner, you likely also sometimes disagree with family members on the job. You might get into heated discussions when you disagree, and it can be easy to reach burnout as a result.
If burnout from the disagreements you have with family members on the clock starts to bleed into your personal life and negatively impacts your relationship with them off the clock, it’s important to prioritise your relationship with family over their involvement in the business.
While it’s a difficult decision to make to solve an even more difficult situation, selling the business to someone outside of the family can help resolve this conflict.
Running a business also means you likely sacrifice lots of time with family members and friends. Your daughter might start to feel disappointed when you miss her football games, or your friends may slowly stop inviting you to poker night if you decline every time, citing work as the reason.
A successful sale can give you that time back to focus on your family and friends without the added pressure of the business. What would you do if you actually had your weekends back?
3. Retirement or change in profession
Perhaps you’re simply ready to retire and book that one-way ticket to Margaritaville with your spouse, finally take up gardening or jump on the chance to see the northern lights. If there isn't another family member who’s interested in taking over, or they don’t have the skills necessary to successfully manage business operations, selling to someone outside of the family becomes your best option.
Alternatively, perhaps you want to pursue work outside of the industry your family business operates in.
Either scenario presents a natural opportunity to pass the reigns to someone else.
If you're struggling to scale your trades business, or even struggling to remain competitive and grow, sometimes selling is the answer. A sale can bring in new funds to support additional hires, new technology, or help the business expand in other ways.
Once you’ve decided that it’s time to sell, you’ll need to start the sales process by planning and preparing for the sale.
But keep in mind that the key to a successful sale is careful planning well ahead of when you hope to close. To even attract buyers, you need to get your finances in order and that can take a while.
An article in Forbes explains that while it can take as little as six months to close on the sale of your family business, it’s best to start planning three years in advance so that you have enough time to go through each step carefully and help your family and existing customers ease into the change.
Typical Flow Of a Sales Process For a Family Business
So you’ve decided to sell your family business. Congratulations! Check out all of the steps you’ll need to take to close the deal in our handy infographic below.
Bonus: If you’ve already read the first part of this blog, you’ve got a head start on the first step.
Back to my story about that horse: I’m not riding off into the sunset on my own pony just yet. I doubt my big red bucket full of gear is still waiting for me at that feed and tack store after all these years. And now I’ve got to get my husband on board with a horse instead of my parents.
As for my mom, she still owns the business she started all those years ago. And while I chose a different career path and never see myself taking it over to keep it in the family, I will be proud when she decides to sell it, and finally, reap the rewards of the legacy she’s worked so hard to leave.
Whether you’ve run the business from the beginning like my mom, or taken over for a family member that came before you, selling your family business is no easy feat. It takes careful planning, structured intention and a lot of emotional processing too.
But it’s well worth the time and effort to see the business you’ve worked so hard to build and nurture soar to new heights. Even if that means you may no longer share a last name with what you’ve built.
Want to read more about running a family business in the trades? Read our blog on five tips for implementing new technology in a family business generational transition.