I once met a man who was in the early years of his retirement. He had successfully sold his company and had moved on to a "friendlier pace", as he defined it. His only concerns were: he still had three years of payments due from the sale and the company wasn't doing well; and, he felt bad that a company he had worked so hard to build was now suffering.
About a year after that, I saw him again. He looked tired and nervous. It seems that the company was doing even more poorly and his company-related troubles had telescoped. Not only wasn't he getting paid the balance of his money from the sale but several company creditors had advised him that they were going to look to him to pay off certain lease and loan obligations.
I asked him how this had happened and he told me a story I shall never forget. He said his buy-out from the company was caused by a difference with his partner over the company's finances and future direction. They couldn't come to terms so they invoked their Buy-Sell Agreement. Unfortunately, the company's original lawyer hadn't provided in this agreement for an "I'm sick of you and want out!" stock valuation and repurchase plan.
They decided it would be equitable for one partner to name a price and the other to either pay it, or accept it (this is often called the ?Russian Roulette? option). Further, they decided on a multi-year payout with an initial lump sum distribution. They closed the deal and the seller took his money and retired. Once the lump sum was paid, however, it robbed the company of most of its cash and started the downward spiral.
As part of the sale, the buying partner agreed to indemnify the seller from any claims over and above the purchase price. They made sure all the taxes and other bills were paid and parted amicably. Sadly, they overlooked certain loans and leases for which they had both personally guaranteed repayment. Failure to remove the seller from these loans and leases made him vulnerable when the company reached the point at which it was unable to pay. And because the company was unable to meet its obligations, the buyer's indemnification offered very little protection. What it did allow was for the seller to sue the company to recover legal fees and other costs, which provided very little comfort.
It had been a very short retirement.
While this example of corporate horror is fictional, each problem that arose was taken from a real instance. And while the example features two equal partners in a corporate setting, these same problems can arise in arm's-length sales, in family transitions and in planned retirements. The challenge to every seller is to be sure you are really getting out and to protect yourself from any residual contingencies after the sale as best you can.
Protection comes from:
1. Making sure that all business documents and agreements, which provide for the contingencies you are likely to face, are regularly updated;
2. Being certain a comprehensive Buy-Sell Agreement and any insurance coverage it provides are in place and current;
3. Checking all loan, lease and other financial obligations to be sure your name either has been removed as a guarantor at the obligation's maturity and not rolled over onto new obligations (a common practice at some financial institutions), and that provisions are made to secure funds adequate to make payments through the term of the obligation in case of contingencies;
4. Qualifying the person/company purchasing your interests to make sure there are the financial resources claimed to ensure long-term success or at least indicate probable survival;
5. Substantiating everything in writing; and,
6. Making sure there is regular financial reporting while you are still owed more than $1.00 from the sale, that default can be invoked prior to a bankruptcy and that there are sufficient teeth in any default provision to give you a fighting chance to restore the company to health if you have to re-possess.
Ultimately, there is no 100% guarantee against losses incurred if a sold business fails prior to seller payout. Taking precautions and properly documenting agreements along the way, however, make for both good business decisions and fewer headaches if problems arise.
Research has proven that customers make five major buying decisions in the course of any major purchase. These decisions are always made in the same order. The first is whether to ?buy? the salesperson?you. The second is whether to ?buy? your company. Only after those two decisions are made will the customer seriously consider whether to buy your products.
This means that you need to sell yourself to the customer'by building rapport while conducting a good needs assessment?before you begin to sell your company and its capabilities. Not coincidentally, that needs assessment will also allow you to sell your company far more successfully. Why? Because you must first understand your customer's needs, before you can answer the customer's most important question about your company.
You must understand the customer's needs before you can effectively sell your company.
In deciding whether to do business with you, customers have three basic questions about your company:
1. What does it do? 2. What is it known for? 3. Is your company a good match for mine?
The first two questions usually can be answered with a rehearsed sales presentation that explains what your company does and the benefits that other clients have gained from doing business with you.
The third question is most important, however, and you cannot answer it with a generic presentation that relies on standard information. To persuade customers that your company is a good match for theirs, you must tailor your answer to their specific needs.
The best way to do this is to tie your company presentation directly to needs that you uncovered earlier in the sales call. You thus are able to present your company's capabilities as solutions to the customer's key problems and opportunities.
For Example:
?You told me earlier that service from your current supplier is taking more than 24 hours and that this causes you problems meeting your production goals. We would be a good match for you because our service response averages less than four hours. With our company handling your service you will find it far easier to achieve your goals.?
?Are we a good match?? is every customer's most important question about your company. You cannot answer it before you have uncovered, understood, and agreed upon the customer's needs. ?Sell yourself? first by demonstrating that you care about those needs. You'll be amazed at how much more effectively you can then sell your company.
In The Field:
If you are in a commodity business and competing with rivals who sell on price alone, it is especially vital to tell your customers a powerful ?company story? that explains why they should do business with you. For National Camera Exchange, which competes in the commodity-oriented business of photographic equipment, differentiating itself from the myriad of price-only suppliers is a daily challenge.
National Camera's added-value proposition lies in the expertise and consulting skills of its sales force. Its equation for success or failure is simple: If the story of that consulting capability isn't told effectively, the company loses to lower-priced competitors. Sales and training manager Sean Morgan says that an Action Selling sales training program made a world of difference. ?Since more of our salespeople are telling our company story, we are posting higher numbers, and they look less like a roller coaster,? Morgan said. ?When the customer needs an education on camera equipment, it is critical to sales success to show them how National Camera is a good match for their needs.?
Both John J Reddish & Duane Sparks are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
John J Reddish has sinced written about articles on various topics from Sales Training, Finances. John Reddish works with and speaks to entrepreneurs and top executives who want to master growth, transition and succession, helping them to get results faster, less painfully and in ways that work for them. Author, speaker, consultant and mentor, John is. John J Reddish's top article generates over 4400 views. to your Favourites.
Duane Sparks has sinced written about articles on various topics from Home loans, Sales Training and SEO Search Engine Optimization. Duane Sparks is founder of The Sales Board, a Minneapolis-based company that has trained and certified over 200,000 salespeople.. Duane Sparks's top article generates over 14800 views. to your Favourites.