Last month I sold my seven-year old business, Big Fat Soap. Since I made the announcement dozens of fellow business owners have asked me how I did it, as though there were specific steps involved in the process. While I cannot outline exactly how the potential buyer(s) were found I would like to demonstrate what the experience was like from my perspective. Later Part Two of this series will explain the amount of work involved in getting it sold, because there was a LOT of work involved even after I watched the truck drive away with the contents of my business. Read on to hear how it happened.
After months of deliberating and soul-searching it was decided that it was time to close the business. All that went into making this decision could be Part Three of this series and perhaps it will be. Suffice it to say it was not an easy decision, in fact it was painful and heart-wrenching. In mid-March 2016 I made the announcement to the customer base as well as social media outlets. Big Fat Soap was closed.
There was an immediate outpouring of well-wishes from all walks of life – faithful customers, family, friends, and a few folks who had followed my business journey through the years. It was bittersweet as the outpouring continued and some folks were begging for leftover inventory and some fellow business owners were asking if equipment might be for sale. At that point my plan was to liquidate assets little by little.
It’s a great feeling to know the product I developed was loved by so many. There wasn’t much inventory left at that point since I had allowed it to dwindle as the closure became imminent. In hindsight I realize a better approach would have been to stock up and have a massive Going out of Business Sale, but that is not what I chose to do. Within days of the announcement two people inquired about the possible purchase of Big Fat Soap. This was completely unexpected.
I always said the business had momentum of its own and this proved my theory. I built a reputable brand over the years and it warmed my heart to consider it may live on and grow with new and fresh leadership.
Initially I checked in with my Small Business Adviser. She advised me that since I had no trademarks it would not be necessary to hire an attorney to complete the transaction. The next steps were to gather lists and pricing for the potential buyer(s). This step required thorough inventory of every piece of equipment, displays, product labels, raw materials, supplies, marketing materials, and thoughtful consideration about the potential value of non-tangible items like product formulas and domains. Once the list was complete, itemized pricing ensued. This was not a simple task, in fact this process took the better part of a full work week.
Once the final price was determined and presented to the buyer, including the detailed list of assets, the buyer requested a meeting with a comprehensive list of questions. I shared Profit and Loss statements for the past four years, answered his questions in writing. The buyer agreed to the terms and price.
A week later he arrived to complete the transaction and to literally pick up his new business. We spent several hours going over details and answering questions. We each had subsequently downloaded contracts for the sale of a business and since they were both nearly identical we agreed on mine and the business was officially sold.
In the following weeks there were many items to complete the transfer of ownership, such as domains, the FaceBook business page, MailChimp account/customer list, and the Shopify website. Each of these transfers took more time than you might imagine as it required research to understand how to go about transferring ownership. For example I owned four domains using variations of the business name. Each transfer was done separately through a series of steps on the Go Daddy account. It was time consuming.
The buyer and I agreed upon the steps to announce the sale and introduce him as new owner. I continued to offer guidance and assistance for several months following the sale, although my services were not included in the sale or the contract. It probably would have been beneficial to have worked this into the contract — for me to stay on as a consultant for a designated time period. That is essentially what I’ve done, voluntarily, and for this transaction it has worked satisfactorily for both of us.
The business is alive and well. It still has momentum of its own and I will be cheering from the sidelines always and I wish the new owner great success.