The 2 Truths Every Business Owner Has To Face

There are 2 truths every business owner has to face.

You can’t sell a business which isn’t successful. No one’s going to buy a company that hasn’t consistently produced good profits and cash flow – which they believe will continue after the change in ownership.

No one is immortal. So, every privately owned business is going to be sold, to the next generation or a third party, at some point in time.

Why some owners ignore the second truth.

Building a successful company requires vision, developing a flexible strategy and actually implementing that strategy. Then there’s finding funding, hiring and keeping good people, dealing with customers and suppliers, managing/leading and I’m only getting warmed up…………………..

When building a successful business is totally absorbing and fulfilling why would you consider selling? When all of your time and effort is focused on dealing with what is happening now, thinking about an exit strategy seems irrelevant.

Here’s another reason. While all business owners start their companies because they have an idea they think is a winner – their baby – the people who currently own businesses come from at least 2 different generations. And with this, as with everything else, each generation views things differently.

Many older owners – if they even think about it in these terms – didn’t get into business for the capital gain at the end of the day. They got into it to provide an income for their families over their working life time and to build something tangible.

However, younger business owners – those in their thirties and forties – are more likely to be focused on selling before retirement age and doing something else with the money they make on cashing out.

Why you can’t ignore the second truth – especially if you’re older.

If you’re older you are, by definition, closer to the end (however you define it) of your career. And we know that a large number of Canadian business owners are closing in on 65 or 70 – or more. We also know that the majority of them haven’t begun planning for succession or a sale.

This is bad news. Here’s why.

If you build a successful company but make no plans for your exit you destroy the value you’ve created. It’s only a question of the degree to which you do it.

It’s not logical to end a career spent laboriously creating value by doing something that gives that value away.

So if you are an “older” business owner – or if you know someone who is – do something about it now.

It’s not too late – but it will be very soon.

If you’re not sure where to start speak to us – or others like us.


Tags: business owner, cash flow, companies, Jim Stewart, Planning, profit, ProfitPATH, sale, selling, strategy, succession, value


  1. Ron says:

    Great post! I have linked to your article from my financial blog.

  2. Gus Gillespie says:

    The founders of highly successful private companies are almost by definition, people who did not want to work for others. They are also highly effective people – their success proves they understood what their customers wanted and concceived a sound way of giving it to them. Nevertheless, many of them procrastinate about the inevitable ownership transition they know is coming, sometimes to the point of refusing to talk about it. One reason for this is their reluctance to deal with the issues they believe any decision they make will trigger within their families. In effect, they would rather see the their companies fail than face these issues.

  3. Jim Stewart says:

    Thanks Ron, much appreciated

  4. Jim Stewart says:

    Gus, I think you make a great point. Fear – either of consequences or of just opening an issue up – makes people do things that are completely out of step with their usual good sense and judgement. The challenge is to get them to deal with that fear or reluctance. Easy to say, much harder to do.

  5. Tom Deans says:

    Bingo!! Great article. Failing to plan for the most predictable chapter of our lives — the last chapter, says something about business owner’s fear of parting with their business and who’ll they’ll be after their business is sold.

    It is fear of selling that explains why so many business owners elect to gift their business to their children. The amount of wealth destruction and family relationship destruction that takes place by business owners is extraordinarily alarming. Founders, especially, who thrust their business into the ill-prepared arms of children and spouses will define the flawed ego that has defined the greatest wealth creating generation in the history of commerce. Keep beating the drum — if enough of us do we can save business owners from the biggest threat to their wealth — themselves.

  6. Jim Stewart says:

    Tom, thanks for the input, you make some great points really well.

  7. Succession by and large is only thought of by the founder as they get into the later years of their lives. That is too late to evaluate and then prepare the next generation. Founders far too often think of and then get advice related to succession with respect to transactional issues and the resultant transactional solutions are executed. This typically is ineffective and results in the business deteriorating or worse, failing, in the next generation.

    Succession must first start with Transitioning the next generation through shared values and vision. If this process starts early, it can be determined IF they can embrace the shared vision and values of the founder. If not, then it is wiser to sell the business, harvest the value and provide “family” capital to your children for them to seek out their own vision and wealth generating businesses.

    All the best!

  8. Jim Stewart says:

    Dom, I agree with both of your points. The challenge, as you clearly are aware, is getting the founder to address them. Sounds like we’ve had similar experiences – dealing with the results of the founder not facing reality. Thank you.

  9. Hi Jim, yes we could probably finish each others sentences. All the best!

Add a Comment


Post History