“What motivated you to sell your business when you did?” I asked.
“You’ll understand this when I say it.” He replied. “The fear of the dreaded phone call….The factory blew up. Someone was killed or maimed by some of the dangerous equipment we run. The president quit. The employees are unionizing. You know.
Those things that could go wrong that would fundamentally and dramatically change everything.”
These are lurking gremlins. which every entrepreneur or business owner fears but keeps under control by having insurance, safety policies, positive employee practices, training and regular meetings with key people. Like the midway arcade game in which you have to whack all the gophers that just keep coming back up, these kinds of issues are ones that are dealt with by business owners on a continuous basis. When I talked with T.B.* about selling his business, I perceived that somewhere along the way the gremlins got bigger.
Frank was on a five-year track to sell his business when he received an offer in year four. “Why did you sell?” I asked him.
“It wasn’t what I was looking for, but I was afraid the market might drop and it could be worth less a year later.”
We are motivated to act either to gain a benefit or to avoid a loss. In the cases of the people I am interviewing who have sold their businesses, the majority have sold to avoid a loss. In some cases, fear had become a stronger force in their life than their former optimism, confidence and strength and they wanted to sell before it was too late. Before something goes wrong that they can’t fix. Before their company loses value. Before their health goes.
In some cases it is a healthy fear. Things can go wrong and if they have stopped doing the things that made the business successful or have lost their spark, they should either sell before the business slides backwards or they should pull themselves up by their bootstraps and get it back on track.
The problem with selling when you are acting from a state of fear or pessimism is that you are likely to make mistakes. You may truncate the process because you are uncomfortable with that emotional state and want it to go away. You may accept a lower price than you should. You may not consider other options that could provide a better deal for you, your employees and your family. You might react versus being proactive in managing the process.
Fear tends to come from a real or perceived lack of control. The antidote for fear is confidence. If you have done your homework, watched the trends and know that the timing is right, then you can sell from a position of confidence, not fear.
* The names of the individuals in this article have been changed to protect their privacy.