Selling a Business Without Alarming Customers, Employees, and Vendors

All the customer that have been acquired over the years may likely be the reason the business is an attractive opportunity for a buyer, therefore, it becomes a part of the seller’s duty to ensure that the new business owner acquires the support of those customers. Bob House, President of BizBuySell in a 2018 YouTube video entitled, ‘Best Ways to Prepare to Sell Your Business and Mistakes to Avoid,’ outlined that; a business must be transferable, especially high-value customers. If the business is only about the current owner then when they leave they take that value with them and that affects the resale value. An owner’s identity can become wrapped up in a company and it is very important to be able to separate them from the business. Towards the transition of customers, the owner should prepare customer information such as an email list and proceed to notify customers of the upcoming changes. A notification can be in the form of an email, phone call, or an advertisement in the local paper. A customer appreciation event may also be a creative way of introducing customers to new ownership. Take care to mention any name change, and give customers a platform to express any concerns about the pending change and be able to provide reassurances.

Employees are arguably one of the most essential assets of a business. They contribute their talents, skills, and efforts to the success of the business. However, this is an exchange that provides them with the means to provide for themselves. A transition may be seen as a threat to their livelihood, therefore, it is essential to prepare them in such a way as to forego any panic. If key employees begin to jump ship because of looming uncertainty this can jeopardize a potential sale. Therefore, it is important that a business owner seeking to sell be as forthcoming as possible with the employee. Do not surprise them, be transparent, do not let them assume or circulate rumors share your exit strategy in as much detail as is sensible. There are examples such as Sun Country Airline, where employees banded together to purchase the business hence employees can be a part of the solution. However, do not overshare details of a deal that is not yet irreversible. Because if a deal that they have alerted to falls through this would create similar doubts about their future.

Vendors extend credit, provide merchandise on consignment and if vendor relationships become unraveled during the transition this can put the business in distress. However, this can be avoided with some preparation. News of a sale can suggest that the business is under pressure which would harm the business in the weeks or months leading up to the sale of the business. Therefore, it is important to let vendors know of plans to sell the business and allow them to offer solutions for a seamless transfer of obligations, contracts, and connections. Introduce the buyer to vendors as soon as it is practical so that a trusted business relationship can be established before the business is turned over to the new owner. Being transparent with vendors about plans to exit the business as well as providing a timeline, and connection to the new business owner can go a far way in ensuring an easy transition.

The impact of sounding alarms, to the many stakeholders is potentially serious. Vendors may restrict your credit or supply, customers may avoid shopping with you thinking you will not support what you sell, and employees may quit. Handling the conversion to another form of ownership is a tricky process that has to be considered carefully so that any disruption to the business is minimized and allows for the change to occur. If done poorly it can cause the change to be canceled.