Conditioning Your Customers & Employees Prior to the Sale

When you own a small business sometimes your customers don’t make a distinction between working with you, the individual, and working with your business. Likewise, as a successful business owner, you probably focus a great deal on customer service and in meeting their needs, often times handling things personally. While having customers that like you and trust you is a great thing for your business, you need to carefully manage that once you start contemplating an exit from the business.

Ideally, months before the sale, you should start conditioning your customers and employees so that your exit goes smoothly and the customers remain with the business after you are gone. Now, I don’t mean (or recommend) mentioning to them that you're planning on selling. In the vast majority of situations, it does not make sense to let everybody in on the fact you are selling the business until you absolutely have to. I’m talking about conditioning customers and employees so that they are ready to handle the transition with minimal disruption, even if they don’t know it is coming.

Let’s start with customers. For some businesses this wont be an issue. For example, if you own a gas station, chances are that very few people buy gas at that station because YOU own it. However if you have a business that depends more on reputation and customer service, you want to make sure you can separate yourself and the business in the customer’s mind. You want them feeling like they do business with Acme Rentals rather than feeling like they do business with Jim Jones “who owns some rental company”. You do this by getting your employees more involved in dealing with these customers. You want the customers to be comfortable and confident in the abilities of those employees that are going to stay with the business once you are gone. So that when you leave, those customers are totally fine with staying with Acme Rentals because they have loyalty to the brand rather than to the individual. If their loyalty only extends to you, you can never leave!

Turning to employees now, what you want to do here is make sure that there are people there who are capable of performing the function that you previously performed. Depending on the situation this may not be strictly necessary. It may only be necessary to develop employees that are capable of handling their jobs without significant supervision until the new owner gets up to speed and is performing near the level that you were when you left. The existing employees are going to be very important to the new buyer because the vast majority of buyers aren't going to be coming in with a seasoned management team to replace the one you had. They are going to be relying on your employees to maintain customer relationships and help get them up to speed after the acquisition. You want the buyer/new owner to feel like they are taking over a well oiled machine and they can focus on growing the business rather than fixing problems.

The most valuable businesses have customers and employees that are so well conditioned that the owner could take a 3 month vacation and the business would hardly miss a beat. Those businesses are rare, and its not necessary to even come close to this standard to sell your business. But the closer you can get to it, the more valuable your business will be.

Jeff Brown is a Business Broker with Business Acquisitions, Ltd. in Denver, CO. He is also a former M&A Attorney and Entrepreneur who has owned, operated and sold five successful businesses of his own. Jeff can be reached at 720-989-4121 or Jbrown@Baltd.com.