My Library and Courses
Last Update: Sunday March 29, 2020

Key Idea: Know When to Let Go

For three years Bob Orenstein worked for the company that bought his business.  He still collects wine and he is looking for his next big idea.

Key Question:

A: 

You don't have to retire when you sell your business, you have to re-invent yourself.
Bob knew it was time to let go about five years before his business was sold. Tracy knew it was time when the right company made a strong offer.
 
Since they took over her business, The Art Institute has doubled the enrollment and the tuition and built a brand new facility to house the future growth. She can drive by and feel proud that what she spent twenty years of her life on is thriving by helping even more people to develop their talents.

Q: What is the meaning and value of your life?

A: If the answer to that question is, "to make money or to make a living" then you will never sell your business. Bonnie Brown, a family business consultant, told us that the reason many older business owners never leave the business is that they don't have anything else to do. Seems simple but all great truths seem simple on the surface.

We are not suggesting that everyone should sell. Everyone should do what they want to do and hopefully what best serves customers and employees over the long haul. If there is a way for your business to outlive you, you should try to make that happen. If there is a way that your business could grow and provide even more good jobs then you should try to make that happen.

Of course the most doctrinaire among us, especially the literalists among the religious faiths, have ready and fixed answers for all of us. We hold only one truth to be self-evident, and that is that business should always be defined as "value-creation" and value is what creates order/continuity, relations/symmetries, and dynamics/harmonies. All else is the product of exploiters, not business people.

By the time most of us business owners get into our fifties, we begin having some depth of knowledge and reasoned thinking. We believe these are our wisdom years and very important years for most of us to transition out of our business and to begin serving on boards and as volunteers.

Think about it

Bob knew it was time to let go about five years before his business was sold. Tracy knew it was time when the right company made a strong offer.
 
Since they took over her business, The Art Institute has doubled the enrollment and the tuition and built a brand new facility to house the future growth. She can drive by and feel proud that what she spent twenty years of her life on is thriving by helping even more people to develop their talents.

Topic for Discussion: What is the meaning and value of your life?

Answer: If the answer to that question is, "to make money or to make a living" then you will never sell your business. Bonnie Brown, a family business consultant, told us that the reason many older business owners never leave the business is that they don't have anything else to do. Seems simple but all great truths seem simple on the surface.

We are not suggesting that everyone should sell. Everyone should do what they want to do and hopefully what best serves customers and employees over the long haul. If there is a way for your business to outlive you, you should try to make that happen. If there is a way that your business could grow and provide even more good jobs then you should try to make that happen.

Of course the most doctrinaire among us, especially the literalists among the religious faiths, have ready and fixed answers for all of us. We hold only one truth to be self-evident, and that is that business should always be defined as "value-creation" and value is what creates order/continuity, relations/symmetries, and dynamics/harmonies. All else is the product of exploiters, not business people.

By the time most of us business owners get into our fifties, we begin having some depth of knowledge and reasoned thinking. We believe these are our wisdom years and very important years for most of us to transition out of our business and to begin serving on boards and as volunteers.


You think about it: How do you spend your time now? How would you like to spend your time? Is there a gap in the answers to these two questions? If so, what can you do to close the gap?
 
 

Clip from: Sell To A Public Company

La Jolla and Dallas: Every day the press reports, especially The Wall Street Journal and Forbes, about how big business acquires small businesses in order to grow.

If you are running a good business and have market share in your industry segment, you should consider preparing for that call or knock on the door, "Can I buy your business?"   In most every episode of this show we explore how and why the founder of a business gets started and how they get over the hurdles. This week we look at how they received a very large check for the fruits of their labor.

Today, we spend time with Tracy Myers and Gary Cantor, the founders of Advertising Arts College, and Bob Orenstein, founder of International Wine Accessories (IWA). Both have completed all eight steps within the business cycle, and they define what it means to "Exit At the Top." You met Bob a couple of years ago when we did his story about starting IWA from the extra bedroom of his townhouse.

Both stories are important.

Gary and Tracy's story is for all of us who are not even thinking about selling, then there comes a knock on the door.  Bob's story is for the rest of us who know that we have created a substantial asset. Bob, however, knew that his "time" was coming. Bob was strategic and spent several years getting ready for the day, and then it took over four years to consummate a deal.

To say the least, every one of us should have an exit strategy.

Go to Key ideas and Video from this episode...
More video on the eight steps to exit...
Go to the homepage for this episode...

International Wine Accessories, Inc. (IWA)

Robert Orenstein, founder

10246 Miller Road
Dallas, TX 75238
2143496097

Visit our web site: http://www.iwawine.com/

Office: 2143496097

Business Classification:
Home products

Year Founded: 1988

Know When to Let Go

HATTIE: Why do you love this particular spot so much?

TRACY: I love this spot, because it's private. I've got the mountains. I've got the ocean on the other side of the house. I've got gardens. It's quiet, and I was just lucky to find it.

HATTIE (Voiceover) For Tracy and Bob, life is not all about work, it's about beauty and the joy of discovery. So this is 3,500 bottles, Bob?

BOB: At least.

HATTIE: At least. So you stopped counting?

BOB: I stopped counting, and all I do is collect. It's full. It's almost 99 percent full now.

HATTIE: And you said there's more than one bottle in a rack?

BOB: Well, this side is double deep, and this side is single deep. These are the racks that we sell in the business, and I built myself a wine cellar. This was my garage. Now I can only have cars that are less than 182 inches.

HATTIE: Because you took up this much.

BOB: I took up the garage. So when I go out and buy a car now, I have to buy it by size.

TRACY: I went into the key people personally, individually, and just told them, `We sold the school, and it's a great company that's bought it, and this will be very good for you. They'll be able to most likely provide benefits and things for you that maybe we couldn't.' And of course, they were apprehensive, and they had to wait to see, and they had to meet the people from Art Institute, and it all worked out very well. And for the students, I went into all the classrooms personally, myself and my partner. And we told them.

HATTIE: How did they pay you, stock, cash?

TRACY: We were actually very, very lucky, because we were paid in cash, 98 percent down, and then 2 percent paid a year later, provided there were no problems.

HATTIE: OK. That 2 percent held back was to dig down deeper into the books?

TRACY: I think maybe it's a safeguard for the buyer. What if we didn't uncover something. I was pretty relaxed through that year, and it all worked out, and it came in on schedule. All the cards were stacked in our favor. And the more we went into the negotiating process, the more I realized how valuable this school was.

HATTIE: Was that just the most amazing insight for you? Did you go, `Wow?'

TRACY: It was, actually, because I had no idea. I really never did the numbers on what would the value be if we wanted to sell. And thank goodness for the school broker that I hired, and he was a great negotiator, and so was I, if I do say so myself. And it worked out for us.

HATTIE: So, wow! How do you feel?

BOB: I feel pretty good about it. I feel that my time has come, and that I am extracting myself in an orderly fashion, and that the process itself makes me feel good. That I know that now that I'm in a big corporation, do I really belong? Probably not. That it will outgrow me as I will outgrow it. And that someday, it will be over. But I accept that, and actually am very pleased about it.

TRACY: Obviously, when you start a business, you should start a business because you want to make money. You can still do wonderful things. You can help people. I trained people to go to work. I launched careers. But I was being compensated for that. And that's important. Will people pay me for this? Can I make money doing this? And you might love it in the beginning, and you don't care if you're really making a lot of money, but 20 years later, you'll care.

HATTIE: How do we build something that somebody else wants to buy? BOB: The first thing you have to do is you have to have solid financial numbers, numbers that somebody can check and rely upon. A lot of small businesses put all their effort into growing the sales, growing the organization, investing in the future, but they don't invest in the accounting. We had everything on a trajectory that looked like you could project right into the future.

TRACY: Always be thinking you're going to get a phone call saying, `We're interested in buying you.' And are you ready? Because once someone asks you, they want to come and look at your books and look at your business and look at you right then. You don't have time to backtrack and change your reputation or change your revenue stream. Be always ready.

BOB: So the best advice I could give a business owner is know where your limitations are, and look into the future because you can't take it with you. Just like you can't take money with you, you can't take your business with you. There's got to be a beginning and an end. It would be much better if you determined where the end is vs. some other outside influence.

TRACY: You built it from nothing. You ran it for 20 years. And you've passed it on so it can grow and be better and bigger. I would love to find something else. I'm rested now. It's time. I loved being in business. I've forgotten all the aggravating parts of it. I want to do it again.

BOB: I would say that I'm glad I made it, and I would say luck and timing were extremely important, and that brains may be highly overrated.

HATTIE: (Voiceover) Now that these two are wealthy and still young, they have to set some new goals. But for now, they're enjoying their homes and their pets. Bob is still adding to his extraordinary wine collection, and Tracy is looking for the next flower to plant in one of her gardens.

TRACY: (Voiceover) Oh, I'm so proud. Yes, I'm proud. We worked very, very hard, and we were in the right place at the right time.

HATTIE: For decades, Bob and Tracy created good work, played by the rules, and disciplined themselves to face the numbers daily. If you want to sell to the big guys, the preparation should start now. We'll see you next time.
 
 

Not a member yet? Learn!  Be empowered! Join us!