Strive Masiyiwa:Selling your business (Part 1)

__Don’t procrastinate when facts are obvious.
To be honest with you, the first time I sold

a business, it felt like my heart had been ripped out of my body!  Selling a business for the first time is never easy and can leave you emotionally devastated. However, the important lesson of this series is this: The capacity to sell a business is a "rite of passage" to maturity as an entrepreneur! If you’re unwilling to consider selling, let alone actually sell when you have to, then you’re not cut out for the big leagues…

Now let's talk:

It took me about five years to build my first business. I started building it before I was married and had children. It was everything to me. It was not unusual for me to spend 48 hours at the business non-stop. I was young and bursting with energy, drive, ambition, passion... and I poured it all into my little business.  It grew quickly, and soon people heard about me. I had what they call in Africa "a name," and it was because of my business.

Over the last 20 years, there’s been a lot said and written about my high-profile dispute with the government of Zimbabwe in those years, as I tried to convince them to let me set up the first mobile phone business.

Today is not the time for me to go over that ground again. However, my decision to take the matter to court resulted in the government refusing to do any business with me whatsoever. And my business at the time relied on a lot of government contracts…

Whilst I thought that the government's decision was unfair, it was what it was. I had either to wait until the business collapsed, or sell it. I had no option, so I moved quickly to find a buyer.

 __I wasted no time, and I did not procrastinate about it. Don't ever procrastinate when the facts are obvious!

I sat with my accountant and my lawyer, and advised them of my decision. We drew up a list of potential buyers. The buyers knew the challenges I was facing.  I also made sure I disclosed everything, so that I did not mislead them.

A few weeks after starting the process, it had been sold and I was out. I said goodbye to my staff and went on my way. It was tough, very tough, particularly as I had sold as a "distressed seller," which meant I had little room in the negotiations. I did my best to get the best deal.

From that day forward, I was never the same again. I had acquired a tough inner core: I had become a better entrepreneur!

 __Today, I have sold many businesses, for any number of reasons. And I shall talk about some of them in this series. I did the right thing, each time.

Selling a business is not always because of a crisis; it’s just part of good business.  It’s like selling soccer players to other teams is part of the business side of owning a soccer team. A soccer team that won't sell any of its players is not a serious team. An entrepreneur who will not sell a business or assets to deal with a problem they face, is also not serious.

I know investors who won’t put a cent into your business unless you assure them that you’re willing to sell, if that’s the best option for the business!

In this discussion, I’ll examine a number of issues relating to when to sell, and how to sell.

To be continued...

Afterthought 1.

When I was in America a week or so ago, a young entrepreneur came up to me and said proudly, "I'm a ‘serial entrepreneur.’ I start businesses and then sell them to big businesses like Google and Apple."

"Next time you have a business to sell, give me a call first!" I replied laughing.

That’s his business model. It's rather like a guy who sells "day-old chicks." It's a very efficient business model.  What’s your own business model? .

Russell, Writes:

And is it possible to sell an idea before l launch it as a business?

My reply:
Yes it is possible to sell an idea, before setting it up as a business. You must first register for a patent over the idea, which requires you to prove that you are the first person in the world to come up with that idea.
Once you register your patent, you can sell your idea.
I have written about protection of your ideas (Intellectual Property) extensively before, this is why it helps to go back to my old posts, if you are new to the platform.
When you read my posts, you have to also read the comments from others, because many of them are quite extraordinary. I enjoy reading all the comments, just like I have done with yours!

Afterthought 2.

"Are we dealing with a distressed seller or a distressed asset?"

When you look at a potential acquisition (a company you want to buy), you obviously have to ask a lot of questions:  Is the owner facing a real problem – like cash-flow, illness, political, etc. -- but the company itself is performing normally?  Or, is the asset you want to buy performing poorly in the market (perhaps facing new competition, or losing value because it can’t innovate to meet market demand, or key global prices have either risen or fallen?) There are lots of reasons people sell their businesses. You and your team need to ask the right questions to find out.

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