Whenever starting something new we always kick off with such gusto and enthusiasm. Whether it is a new gym membership, and we attend three times a week, eager and ready to go, until the enthusiasm drops off and that slows to two sessions, then to one, then we stop going altogether. Unless you are truly dedicated it is hard to keep up that level of intensity.
This is no different to operating a business and as time goes by and motivations change, interest diminishes, and the foot comes off the accelerator. This can be a natural progression or can be due to circumstances changing for health or relationship reasons or one of many other things that change in life. As a result, we slow down either on our day to day work life or make changes to accommodate, such as putting a manager in to operate the business, or simply adding additional employees to relieve the workload.
This is not always the case though, with many continuing to work their business as hard as ever. It is part of their DNA not to slow down and even avoid taking time off at all. As people talk about having a balanced investment portfolio, the same goes for operating a service-based business. It can be extremely tough, but the day a guest is not greeted by a happy face, is the day we realise we have a shift in behaviour. Recognition of this is probably the point here, which should lead to thinking about timing and reassessing goals.
There are many reasons that a business is brought to the market - tiredness (even burnout), retirement, changes in circumstances, upsizing, downsizing, capital gain and so on. All too often the final decision comes down to exhaustion, the owner has had enough and lost that enthusiasm that was so strong when they commenced. They no longer have the passion or the energy to drive the business they once enjoyed doing and they decide they need a break. Considerations about selling probably needed to be considered prior to this point, not once the decision is taken away, by it becoming a “must sell” situation. The best financial decision-making position is when things are calm and not when they are based on highly emotive reasons or positions.
During any given day motels have their busy times and their quiet times, and it is how one manages this time that determines their longevity within a motel. Some owners work themselves into the ground for two years to keep operating costs to the bare minimum and unfortunately reach a point where they need to get out. Others operate their motel business to suit their lifestyle requirements and ultimately end up operating the same motel for more than a decade, or in some cases I know of well over thirty years. Longevity such as this in any business must mean they are doing something right and have a good work/lifestyle balance that suits them.
A common goal that new motel owners start out with is “a five-year plan”. I think it’s a round number that seems like a reasonable period of time to operate the business and by that stage be ready to move on to the next challenge. Having a goal is a great idea however not always easy to achieve for various reasons as mentioned above. Interestingly some reach the goal and beyond, others may decide after a year that it is time to move on. Either way making that decision at the right or appropriate time is the key.
A strategy to prepare to take any business to the market is the ideal way to approach things. Many sellers will contact their broker of choice six months in advance of wanting to go to the market. The discussions should include what needs to be prepared in readiness, if any processes or operational matters need to be changed and allowing all involved time to have the correct information and data available ready to attract genuine buyer interest when the time comes. Too often deciding one day to sell and wanting it to be offered to the market the next day, is a recipe for failure. It is not a difficult process but more so one of getting it right rather than shooting from the hip.
Making sure the business operator is on their game right up to the day they settle is going to achieve the best result. It will also make the sale process a less stressful pressure cooker when one is not forced to sell, by choosing to sell at the right time. The seller is happy, the buyer is happy - the ideal situation.