When it comes time to sell a small business, many owners are concerned not just about getting the best possible sale price, but also about the continuity of the business. In a recent survey of small business owners, 41 percent listed “a good buyer fit (future success of the business)” as their top sale priority. However, attracting a qualified buyer is often just the first step to ensuring your business survives a change in ownership.
Many buyers want the seller to remain actively engaged in the company for a period of months or sometimes even years, as a consultant or a paid employee. If the seller's future plans allow them to remain with the business after the sale, this may be extremely valuable as their expertise can play a significant role in helping the new owner, staff and customers cope with (and conquer) the change.
Five tips for productive post-sale support
Outgoing small business owners need to strike a balance between scrutinizing the new owner’s every move, and simply lingering around the company. To accomplish that, here are five best practices for sellers who want to act as helpful advisers after their business changes hands.
- Broach the subject early: Not all prospective small business buyers want to work with former owners after the sale paperwork has been signed. If serving as a post-sale consultant is one of your non-negotiable terms, be sure to bring this up early on in sale conversations. The final contract should include a clear description of what your role will be--and how long you will fill the position--that you and the buyer agree on.
- Develop a roadmap: Whether you’ll be supporting the new owner for 30 days, 90 days or a year, it’s essential to draft an actionable plan that includes the specific goals and steps to achieving them together. If it’s not already spelled out in the contract, this is the time to determine an end date for your post-sale responsibilities. Leaving this timeframe open-ended complicates the situation for employees, and prevents the new owner from truly taking the reigns.
- Establish clear communication policies: In addition to outlining a roadmap, it’s also important to delineate who will be responsible for different internal and external communications. For example, you might lead the initial outreach to current vendors and other business partners, setting up meetings to formally introduce them to the new owner. On the other hand, you may want staff members directing their day-to-day operational questions to your successor to start nurturing those relationships.
- Lead a process boot camp: It’s ultimately the buyer’s discretion whether or not to update certain business processes or implement new technology, but it’s easier to make adjustments while understanding the current state of affairs. Set aside time in your roadmap to walk the new owner through your existing documentation practices, record storage, technology platforms, and processes for payroll, accounting, marketing and any other operations.
- Promote confidence in your successor: As the former owner, you hold more clout with customers, suppliers and workers than your replacement. Make it a point to tout the new owner’s experience and strengths whenever possible. By demonstrating your faith in his or her ability to takeover the business, you’ll inspire the same confidence in others (and increase the likelihood that they’ll stick around).
Agreeing to support your business after selling it is tricky terrain to navigate. With the right plan in place, however, it can be the boost your business needs to guarantee success long after you’ve stepped aside.