Creating and growing a business is, in many ways, much like raising a child. Simply, it is hard work. When there are multiple family members managing the company and depending on it for their livelihood, how you want the company to grow and develop often takes you on a different path than companies with one owner or an owner planning to sell upon retirement.
Many people dream about creating a family business, and while running a family business is one of the most rewarding jobs in the world, the owners of a family business worry more than other entrepreneurs because so much depends on the ability of the company to thrive across generations.
The first generation of a family operation invests incredible amounts of time and money, and carry the additional burden and responsibility to make sure that the company is well positioned to meet challenges and seize opportunities over time – these owners are playing the “long game” and managing for the future. For these owners, today’s profit is often not the primary goal. Instead, today’s profits are often secondary to building a well managed, stable company to hand-off to future generations.
Owning a successful family company provides comfort, financial security and a lifestyle that corporate folks only dream about. On the other hand, it can be overwhelming and managing family members – children, siblings or even grandchildren – brings complexities into play that have nothing to do with “the business”. So, it is not a surprise that not every owner is happy with their multi-generational operation and decide to sell their family-owned company at a certain point in their lives.
For some, family is family and business is business. Sometimes the two simply have to work well together.
Have you ever thought about what you will do when you need to say goodbye to your business?
Since the increased number of family owned companies is an important part of the transportation industry and the overall economy, The Tenney Group – a multi-generation company itself – has worked for more than 30 years to develop viable solutions to help family-owned transportation businesses protect the success and value they have worked very hard to achieve.
The selling of a family-owned business should not be looked upon as a failure, on the contrary, it should simply be the next step in the company’s life cycle. Remember that not all business owners perceive the process of selling their business in the same way, but the strategies and tips below are offered as tips and tools for you to use in your decision making process.
When is it time to consider selling the business?
- Sharp disagreements within the family and failure to communicate.
- Damaged family relationships and strong family conflicts influence the well-being of the business.
- The business has a bad influence on family relationships.
- The next-generation is not able to work as a competent team, to share and maintain the culture and the values of the company.
- The business is no longer competitive.
- The family owners have lost interest in the business and the amount of work required.
Follow these steps to tilt the entire process of selling your family owned business to your advantage:
- Establish a team
Organize a meeting with all the members of the family involved in the business and together set the players who will be charged with the research and plan development. Include everyone who needs to be on board, including your lawyer accountant, the auditor and a team of advisors familiar with your type of business (if not the business itself) and industry.
- Establish the real value of your company
This is one of the most important steps that must be taken when deciding to sell – decide what it is that you are selling. Don’t undervalue your worth – it isn’t just rolling stock and real estate. The value of your business affected by the culture, the mission of the company, by its people, and by the relationships with the clients and with the market.
- Clarify all the problems related to the business
When preparing to sell your business, it is important to understand the needs and expectations of potential buyers. Ensure that there are no pending issues or problems that might effect the value or efficiency of the company. Viability is key to not only finding a buyer, but getting top dollar.
- Develop a plan
More buyers will be attracted to your company when you have a action plan in place. Set clear goals, strategies and tactics to ensure the future profitability of your business even though you will no longer be part of it.
- Tell your employees
Transparent communication is an important key to a company’s success, but when you are selling your family business saying too much can influence the entire selling process. Tell your employees that you are selling the business but keep sensitive issues for later. Explain to them the reasons behind the selling and let them know if you are planning to sell to a buyer who will retain the existing employees. But take into consideration that, in many cases, telling your staff about the intention to sell the business can jeopardize the entire process and destabilize the selling environment.
Selling your family-owned transportation business is one of the biggest decisions you will ever make. As experts in company valuations and the buy and sell process we are dedicated to provide external professional advice, and help you simplify the entire process.