Lessons Learned from Selling My First Business
We recently sold a coffee shop and I think we did almost everything wrong. Here are a few lessons I learned selling my first business. Hopefully this will help others avoid the mistakes we made.
Don’t show your hand
We found out a few months ago that my wife is pregnant. She has been putting in 60+ hour weeks and we knew this wasn’t a sustainable thing so we wanted the deal to move quickly. We advertised this to our buyers openly saying that we would take less money in exchange for a shorter timeline on the deal. This seemed harmless at the time because it was the truth, but it came back to bite us.
Letting our potential buyers know that we were in a bind immediately gave them all the control in the negotiations. They knew our options were limited and that it wouldn’t take much for their offer to be more attractive to us than having to liquidate everything and find someone else to take over our lease.
Don’t count on anything until it’s in writing
We wanted to do everything by the book but we ended up getting verbal offers and making agreements on a handshake with the promise that the paperwork would come later. We banked on these agreements and started planning our lives around transition dates that came and went without any word from our buyer. Even if you ask for things in writing, people are going to try to negotiate with you before making a formal offer. Don’t count on anything from a verbal agreement because you don’t have anything until it’s in writing.
This was one of the most frustrating things I’ve ever had to deal with. We kept asking for things in writing but we didn’t get them. At first we trusted the person we were negotiating with and he would say “my laywer is putting something together” but it never came. We had agreed on a price, transition date, etc., but because the offer wasn’t in writing there was nothing we could do when our buyer didn’t hold up his end of our agreement.
Put everything in writing
My wife originally said that she would be happy to help with the transition. Unfortunately, nothing was laid out in the contract about what that transition period would look like. We thought it meant that they would come in a couple weeks early to shadow and learn our processes, but they took it to mean that my wife or someone from our staff would be sticking around after the new owner took over.
Anything that could possibly be negotiable needs to be written down. No matter how small a detail, if you think of it, put it in writing. It really isn’t that hard and you’ll thank yourself later when you can say “what does the contract say about that?”
Always be looking for a better offer
When we made a verbal agreement to accept an offer we put our marketing efforts on hold. We were stuck scrambling when the agreement wasn’t upheld by the buyer which put us in an even worse spot than where we started for negotiating a new deal with someone else.
Had we kept marketing the sale of the business we would have put some pressure on the person we were working with to move things forward on his end and we may have even found a better offer. There is no way it could have hurt us and it came back to bite us in the end because we ended up working with our original buyer, but completely on his terms.
Don’t be desperate
When we met with potential buyers I’m positive that we came off desperate and that it took power out of our hands. We acted like someone was doing us a favor by buying our business, but that’s certainly not the case. I guarantee that having this mentality during a negotiation will leave you frustrated and disappointed with the outcome.
Save yourself some energy and frustration. Don’t be desperate to sell your business and don’t be afraid to ask for what you want. You’re not going to scare anyone off by asking for more favorable terms.