Follow the Money, Sometimes Bad Advice

At this pace, we’ll double revenue in four years. I’m just not sure I can maintain this pace.” Katie (not her real name) owns a very successful services company. She serves a niche that is fueling fast growth, and every new dollar of revenue is more profitable than the last. She has the essence of what’s called a scalable business.

In her mid-40s, Katie seems nowhere near the age to slow down, much less retire. But she called me after having read my weekly blogs for almost a year. “I’ve been thinking, I don’t want to be one of those owners you write about who stays on too long. But I also have to tell you, I’m plum wore out. Maybe it’s time I sell and let somebody else take it from here.”

Her comment surprised me because her company is on the verge of another growth spurt, and it’s likely her value would double in a few years. She and I had two long conversations about the implications of selling now or in three to four years. She had a very clear understanding of how much money she would be giving up by selling now instead of waiting to see the value from her expected growth.

I’m afraid what staying with the business will do to my health and relationships. I’ve sacrificed a lot to this point, maybe too much. I suppose I could sell now, take a couple of years off, and maybe do something new in a couple years when our kids are out of high school.”

It’s funny how business owners come to me for advice, yet there are times when I feel like I’m the one learning. Katie is a very sharp business owner. She will put a seven-figure amount in her personal bank account when the business is sold, even more if she waits a few years. But more money isn’t always the objective. It was fascinating to hear Katie talk through the trade-offs required to balance work, health, and relationships. It’s a process we can all learn from and should do more often.

 

JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The story above is true, but the names and fact patterns above have been changed to preserve the parties’ identities.

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Tennessee Valley Group

Jim Cumbee established Tennessee Valley Group to help business owners fulfill their dreams for life after business ownership. It’s a mission that his 30+ year career history had prepared him well for—in addition to being an attorney, transition mediator and business broker, Jim has been a buyer, seller, and entrepreneur. His broad range of experience gives him unique insight into how business buyers and sellers can achieve their goals.

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