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S2E5: No one tells you how to feel when you sell a business

After dedicating nearly my entire career to the endeavor of growing a business and counting on the talents of so many people over the years, I sold a business in 2020. But no one ever tells you how you’re supposed to feel or what to do, look for, or figure out in the lead-up to that process. So much of selling a small business boils down to, “Well, you look like you have money.” Here’s what I learned.

Transcriptions for this episode are generated by automatically AI. A copy of the transcript follows.

Every time I told somebody I was selling my business, they would say, “Congratulations!” And I would think, “What are you talking about?” I just screwed everything all up. Nobody ever tells you how you’re supposed to feel when you sell a business. Because from the time I started my freelance business, which in earnest sort of started in the blink. I don’t know, 2003-ish, 2004.

I grew that business steadily for literally my entire career. And it was a hard-fought thing. I didn’t never have money for large advertising schemes or grand marketing plans or whatever, which is ironic considering I ran a website design and developed as a marketing advertising agency.

But I did it one client at a time, doing it the way that people who have been doing it for a long time will tell you is the best way to grow a business, which is that you just provide a really good product or service, and the rest should just sort of take care of itself. I still sort of believe that, but that’s not entirely true, of course, advertising certainly makes things go a lot faster, and if you have the money to be able to do that, you can sort of turn that success dial up a lot faster.

From my experience, though, I had been putting everything into this business, and particularly around 2009, or excuse me 2007 rather, when I really started in earnest, there was a time when I made the commitment to leave what was then my full-time job that had benefits and steady salary and start this business. And I think that year that I made something like $7,500. I think actually my tax returns that you reported something in the neighborhood of like $74, $1,700 in revenue and profit really. And the amount of money that can revenue that I managed to bring in was something like $13,000. It was like $13,000 or $14,000. And in retrospect, I don’t even know how I did that, but I did it through not spending a lot of money. A lot of tuna salads in, which is, I remember that.

There were a lot of those for lunch. I’d have a half a can for lunch, and then the other half, which would make the other sandwich for dinner. And over time, I got a few more clients here and there. And then somewhere along the way, things went off the rails. Things changed when I got an office space because somehow the expense scheme changed. I got more clients as a result of that. It generally was a good thing for the business to have the office space because it allowed me to be near other people, other business owners and sort of give the ability to meet new people and that networking had a useful effect based off of the office space that I was in. It was affordable space by all measures. But in that time, I also managed to bring on interns and staff, I had contractors. I was trying to scale up in useful ways. And most of that scaling was just sort of churning around and around and around with clients all day all night on stuff that truly just kind of didn’t matter for a lot of people in a lot of ways. I had a lot of clients that just took up a lot of time. They were high touch, they needed a lot of handholding, they wanted everything explained to them in a way that most businesses just can’t quite scale.

Certainly not at the rates that I had been charging. And so I had agreed this business and I continued to grow this business in a way that was really great for one person, but not great for a lot of people. And once I sort of was approached by this idea of like, “Well, maybe you should consider selling somebody that I knew and trusted had a connection that they knew and trusted who might have been interested.” And so there were actually a couple of suitors who had proposed Bids to buy the book of business that I had made. And by this point in time, the business was making some place in the neighborhood of about $150,000 a year.

I wasn’t pulling that much money out of it. A lot of it was kind of going right back into the business in ways that paid for other people and paid for help and other office space and that sort of stuff. And so I wasn’t realizing a lot of it. And I felt like I was working a lot to not really have a whole lot of benefit from it. And around 2018, things had been off the rails for a while. The number of clients that we had was just a little bit too much. I used to call it the hump problem, because if you imagine that if, if, say, for example, as a business, you’re able to maintain 10 clients of a certain size and scope, and then you want to keep growing, you need another 10 clients pretty quickly in order to pay for another person, right? And so if you have 11 clients, that’s really hard because you don’t have the money from those 11 people to pay you and somebody else. And it’s difficult to find, you know, talented, young people, talented juniors or talented part-time people, particularly in the web design development industry that are loyal to those sorts of things because they themselves are probably trying to do other things. And so even if you had 12 or 13 clients, it’s still not enough to sort of get you over the hump. You need probably 16 or 17 clients to in order to pay for yourself and most of of somebody else or at least to break even in that. And then you really want 20 clients because that’ll make it comfortable for you and the other person. The problem then is that when you have 20 clients, well, then you’re in the exact same hump all over again where it’s like, well, now we got 21 or 22 clients because somebody referred somebody else or somebody came in the door or whatever.

And then the result is that you’re always fighting this hump where it’s like I just need a little bit more money to afford this XYZ thing over here or this person over here. And I was constantly in that struggle. It was incredibly stressful for me. I think I’ve probably aged more in the years between like 2017 and 2020 than just about any other period of my career so far. I enjoyed having a lot of long-term clients that were still good for customers of ours. We increasingly had other clients that we would occasionally recognize that we should turn down or turn away. But by large, we did what a lot of businesses do, which is that you just sort of take people on because at least within a service business like ours, you just don’t know quite what you’re getting into with people until you’ve worked with them for a while. And no amount of interviewing or vetting or anything like that is really going to change that dramatically.

And so by the time 2018, 2019 rolled around, I was just burnt out and I just did not know what to do until somebody came along and said, “Hey, maybe you should consider selling the business.” And I had never thought about that before. It just, I was kind of in this mindset of like, “This is just what I’ll do until I die, I guess.” ‘Cause I just didn’t know what else to do. And if it didn’t seem like, I certainly couldn’t walk away. I couldn’t leave all those people hanging, right? because there were some people who I genuinely liked very much and were relying upon us to do a job that’s very important to them, represents them in their organizations and their businesses.

And part of it too is that in addition to being burnt out on all that sort of business administration stress and sort of the constant grind around the hump of always getting over the next problem, I was also kind of bored with a lot of the work because a lot of it was is just so repetitive. It’s like, oh, this person’s got their golf outing again this year. This person’s got the such and such event. This person’s doing this thing. And it’s not even like the themes of these things changed very much, right? It’s not like they’re like, I’ve had some clients that have like nonprofit fundraisers, for example, or big galas every year, but it’s a different theme so you kind of get to do different interesting things with it. In my case, a lot of the work was just like, no, but it’s the same golf outing.

It’s the same expo that we’ve always done, the same conference we’ve always done, same this that and the other the same father’s day say all the same mother’s day event the same everything right it’s always kind of the same routine and so for a lot of clients that was both a blessing and sort of a stickiness of us because we mostly me just deeply understood the patterns of things I knew what they liked and if they didn’t like I knew what they couldn’t couldn’t say based off of policies or internal preferences or laws or whatever and so there was never a moment where they had to run out and like onboard some other agency or whatever or some other person or freelancer and then have to explain all that to them all over again because we just knew it, right? We could anticipate their needs, we could anticipate what problems they were going to run into, we just got better and better every single year.

But even though we got better and better at providing a service to them every year, it didn’t necessarily mean that we got faster at it every year. Sometimes it just took up a lot of time. And a lot of times, that time was consumed doing things that just weren’t that interesting. Even like month to month sort of things, where it’s like, well, here’s their monthly meeting or their quarterly whatever, and just sort of producing all the material that goes with it, because now they need a social media graphic because they want to put something on Facebook.

And we need a webpage for it and a registration for it. And we need to email campaigns for it. And that there’s whole big strategy for this thing that to them is very important. and I don’t belittle it and I don’t begrudge them for doing what they were doing. And I think that’s sort of what makes the world a rich and interesting place. But after you do that for three or four years, five or in my case, close to 10 or 12 years with some people, you just kind of want to know, it’s like, was there anything else that I can do?

And sometimes you try to pass the stuff on because I can hear you out there, I can hear people saying like, well, you should delegate these things. If I had spoken to a business coach at some point, I’m sure they would have told me the same thing as occasionally. I would have brief conversations with business coaches who would always tell me these things like, “Oh, well, you have to delegate these things out so you can go on and do these other things.”

But I didn’t really want to do that. They took me a long time to realize that is that I actually liked creating the stuff to an extent that I liked being the person who was actually making things even though I got tired of doing the same things over and over again as opposed to being the person who just sort of ran a business, right? to each their own, but took me a long time to figure that out. And by 2019, I was in a pretty bleak place. I was tired all the time. I was irritable a lot. I probably wasn’t a very compelling person to be around a lot of the time. And quite frankly, I just didn’t want to do it anymore. And I didn’t know how to get out. And so when this opportunity came up to consider selling, late in 2019, I ran the summer actually I guess July or August of 2019. Started having conversations with a couple of people. The numbers just pretty much break even, right? Like the business just wasn’t that extravagant. It wasn’t like I was gonna be a millionaire. I wasn’t gonna be able to retire off of it. I didn’t even know what I was going to do afterwards.

It’s like, well, if I sold it, then what would I do tomorrow? I just didn’t have an answer for that, but I also didn’t care. I was at that point almost willing to do any number of things, But I had a few rules about it. I wanted to know that everybody was well taken care of. I wanted to make, it was important to me, and I wanted to make sure that all of my clients were well taken care of. I wanted to make sure that my team was well taken care of, that they would carry on, that they would have the ability to be involved, that they would have improvement from it, that they would advance as a result of it.

And I wanted to know that, you know, I wasn’t being totally fleeced, right? And those are the things that you can’t Google for. Nobody ever talks about that when you sell a business. Nobody ever talks to you about how you should feel leading up to it, about what your rules are for selling. It’s usually a very transactional sort of a thing, particularly in big business, where it’s just, well, how much money do you make? What’s your revenue? What’s your profit? Multiply some of that out over about three years. That’s probably the approximate value of the business.

And if somebody’s gonna offer you a check, it should be about three times your revenue or maybe your profit depending on who you’re negotiating with. And there was no guidance for this. This is not the sort of thing they teach you how to do in school, right? And there aren’t a lot of books that I read about it that were very good. I don’t remember any actually at this point that were very good topics about it. But I had my three guiding rules, right? I had my three guiding principles. Take care of the clients, take care of the team, and take care of myself mostly in that order. And by the time the conversations started going around with a few other people, it finally came across a group that was more interested in making a more substantial offer. And part of that offer included that I would continue to work for them for some period of time. And the contract protected them in ways in case I wanted to leave. And I don’t really recall thinking about it that much at the time, I knew that it satisfied two and a half of the rules. Right?

I knew that my team was well taken care of. I knew that my clients were going to be well taken care of, and that I was going to continue to be there. And so by and large, you know, it’s sort of, I guess, took care of me. But then the problem started to arise, which is that after we finally finalized the deal, which just sort of coincidentally happened right ever on the time that COVID-19 was happening, But it didn’t solve my problem. It didn’t solve my burnout problem. It didn’t make my life easier. There wasn’t like some extravagant amount of resources that suddenly appeared, like I didn’t have a new staff. Even though I think in my head there was this point where I thought, okay, I’m going to sell this business to this group over here.

They’re going to have all these people that are already there. And I can just kind of sit back and sort of help guide these people on autopilot for a little while and I don’t have to work as much that I can work like, you know, an 8 to 4, kind of a 9 to 5 thing, even, maybe I’ll just work 6 hours a day or something, right? And that didn’t happen. In fact, things actually got worse because then I was sort of thrust into this higher level director-ish position where not only was I managing more people and then I had to hire more people, but the stark realities of differences in business style came about, right?

That when you sell a business, like you have your way of running things and you have your tolerance for what’s good for you or your clients and you have sort of your ethos about like, well, we’re going to do what’s best for the client and the circumstance and therefore that’s what we’re going to do because that’s how we’re going to do it, right? Whereas you can demand and other businesses that are like, well, that’s not good for the business so we’re not going to do that. And you kind of run into those collisions a little bit. And that’s normal.

But again, not something that anybody really prepares you for. And it’s not really something that at least I at the time was not equipped to figure out how to navigate. I couldn’t interview my way through that. I couldn’t investigate my way through that. I didn’t know the questions to ask. I didn’t know how to suss out a sense for that. I couldn’t sniff that out to determine in advance, it’s like, well, I’m going to sell to these people, but we’re going to disagree on X, Y, and Z. I just didn’t know.

And so we finalized the deal and it was about, I think, June or July of 2020 when the whole deal was finalized and we made an outspest to people and I said, “Yeah, pretty much, I’m going to continue doing this all over here.” So there’s really no change for the clients. The team was in a better position. In fact, they got increases in their pay that was more commensurate with where they really should have been at the time anyway. And I ended up getting more money out of it. I started to make more money out of it. But part of the contractual obligation, which was reasonable from the standpoint of the purchasers, was that I sort of had to protect that book of business, right? I had it be the one that maintained some of that in order to get paid out because it wasn’t a immediate payout. It wasn’t the sort of thing where they just said, “Okay, we’re going to buy this and here’s a big fat check.”

And then, you know, good luck. It was paid out over a period of years on a monthly basis, based on the percentage of the book and various other factors, which again was totally reasonable. Not something that in HipHoney really ever teaches you or prepares you for. I wasn’t really prepared very well for it either. But it was fair. I could understand that at the time. I still understand that. I still think it’s fine. I still think it’s fair. But it didn’t solve my problem. So I had solved two and a half of my rules, but the last half that wasn’t solved was the part where I was supposed to not feel so burnt out anymore. And that didn’t change. In fact, it got worse. And eventually, what triggered a change in all of this was that, as a prodigious wearer of my Apple Watch, I would look at some of the data about my heart rate variability and my heart rate at night and sleep tracking and I always make sure that I exercise. And so here I am, a young person, in my, you know, barely 30 years old, I’m sleeping enough, I’m eating exceptionally well, certainly compared to the average. And there’s just anomalies, right?

My heart rate is just too high sometimes. In fact, just sitting at my desk, my heart rate would be as high as a person who maybe had just walked up the stairs, right? Like, if you sat on the couch and then you walked up the stairs and your heart starts to pump a little bit to catch up with that. Imagine that it stayed at that higher sustained level. That’s what my heart was doing kind of all day. And realizing that maybe the Apple Watch was wrong. I started to look into it a little more closely, a little more carefully, and I realized that there was definitely something wrong. That for the brief period of time that I could take a few days off on a vacation, or particularly on Sundays, which were usually my calmest days, that there was markedly lower, right? It was, you could plot it on a graph.

You could be like, well, here’s Justin at work and sitting on a desk just being stressed out and angry and sort of anxious about lots of different things. And here he is where he’s not any of those things. And I was like, I wanna be that more often than not, right? And further complicating all of this is that as I’ve discussed, my mother died at a relatively early age and sometime around the age of 30 or 31, I started to realize too that I was approaching an age where I would be the same age as my mom when she was initially diagnosed or that I potentially could outlive her. But also, maybe I wouldn’t, that maybe I would end up dying in early death too. And maybe it wouldn’t be a heart problem, maybe it wouldn’t be a brain tumor like what she had, But maybe it could be something that could be fueled by a lot of these things. Whatever it was, some part of my health was not optimal.

In fact, it was sustainably not optimal. It was unsustainable, right? It was consistently not where it should have been. It’s consistently not great, right? And I thought, I have to do something about this and I don’t know what to do. And so I thought the only thing that I can do is I just have to stop. I just have to stop this. I just have to leave this part of my life behind. And at the time, it did not seem like a hard decision to make. It was very obvious, right? It’s like, well, this is not going to work. It obviously cannot work. There, and nothing else is going to change about it that’s going to dramatically improve it. Therefore, I just have to be done. And I was very at peace with that. And so that’s what I did. I walked away from all of that. and just woke up one morning and didn’t have to do all that stuff anymore. And then I was like, “Oh crap, what am I going to do?” And so I ended up getting some smaller jobs and decided, “Do you know what I really would like to do?” Is that for all these years that I’ve done design development stuff, I really enjoy the copyrighting part of it. It’s like, am I able to just create a whole new business and learn from all those experiences in the past and create a new sustainable business that I could limit to like seven or ten clients depending on the scope of them and just be done.

Recognize that I don’t want staff, I don’t want to hire people, I don’t want to have part-term contractors, I don’t want to do any of that. I just want to have a loyal base of clients that I do exceptionally good work for because at some point over those last few years, I feel like no matter how much I tried, it was not possible for me to deliver the same level of work that I had been. And that bothered me to no end. And so I decided that I would do that. And I started with getting a couple of larger part-time contract gigs, one of which was with a school and another which was with a couple of other smaller businesses. and that sort of came out of nowhere that I had approached that I knew. And I thought, hey, we’ve talked about this in the past. Maybe you’d like to just do this copywriting thing. Here’s what I can do for you. And so suddenly I had my base again, right? Except this time, unlike the time when I started this in 2007, I actually had a little bit of a network to fall back on. And so I actually knew some people. And so those connections helped.

And maybe it’s just sort of spin up a business that would allow me to live comfortably almost overnight. And I’ve continued on that path, and now I’m maxed out. And now that I’m sort of in a different place in my life and in my career, I sort of reinvented what it is that I do, and I’m trying to be exceptionally good at that at the things that I do do, and that I’ve diversified the kind of work that I do from teaching and writing and a few other things, working on my book, for example.

That now I sit and I think, how should I have felt throughout all that? And then every time initially when I told somebody, it’s like, yeah, I sold a business or I’m selling the business or whatever, they would always say, oh, congratulations. Like they were very excited about it. And I felt like I had just screwed everything up. I was like, I just built a business that was just terrible. Like I did all the wrong things, all the wrong ways. And anything that I did do right, I probably screwed it up in no time at all. And I felt bad about that. I felt so intensely bad about leaving people. I felt like I abandoned some people a lot of cases, particularly people that I’d worked with for a very long time. And ultimately, I got to a point where I just made peace with that and realized that the way that I felt was driven in large part by that abandoning them, by that abandonment.

And I still feel a little bad about that. But in retrospect, looking back now, connecting some dots over the last few years since all this has transpired. interesting to me, although I still tell people that, oh yeah, I ran a business doing XYZ for so long, and then I sold it in 2020, and then I almost immediately put a subordinate clause in there to say, “Eh, that was pandemic unrelated.” Right? Because it almost feels like, “Oh, the pandemic came along, “and then you lost all your business and then you went out.” It was actually completely coincidental.

And so I feel like I always have to say that. Like, I’m trying to make it sound like I was successful, and I guess in some ways I was. Right? I had a successful exit. I did a thing that a lot of people strive to do in some way and never make it, right? Because they just lose all sorts of money and they never, they’re in debt up to the eyeballs and I never had that. I never had a lot of debt, never had any debt, really. Personal or private. And it worked out. And what the future holds, I don’t know. But recognizing now that when you prepare to sell a business or that when you do sell a business, nobody ever prepares you for how you’re supposed to feel about that. And I don’t know that it’s written in any place that there’s a specific feeling that you should feel. I tend to think that in some ways, most small business owners find it a pretty bittersweet experience.

The sort of thing where it’s like, well, you know, I came to this conclusion for one reason or another, and I’m going to do this because it’s good for whatever reason. It’s also recognizing that you’re letting go of a thing that you built a part of yourself, right? And then somebody else picks that up or carries it on and then whatever happens happens, right? Maybe in the case of a lot of customers, maybe they just don’t stick with you for very long as certain people who purchase large international global social media organizations might a test that sometimes when new ownership comes along a lot of people don’t like that and they just leave and I guess that’s part of it and that’s how the market works. And that’s the system that we have. But I don’t regret that period. In fact, there’s time progresses. I look back and I think, wow, that was all a really good learning experience. It was challenging. It was incredibly challenging. Was it super successful? No, but did I die? No, did other people die? No. Did people get a good service? I think so.

Did people get value out of it? I think so, otherwise why would they have kept paying me all that time? And I’ve managed to create a level of connections and skills that have allowed me to transform into a slightly different career path. And now I have learned from those mistakes. I’ve learned when to say no to clients. I know how to suss out quite when something’s not right or when a person might be a flight risk or their payment might be a problem. I know how to feel about these certain things, and I have a level of control that kind of only comes with experience and wisdom, right? And I now see and I mentor young people who are where I was 20 years ago or so in 2007, and they are struggling with these same sorts of things, and I recognize that even when I tell them, my experience are kind of how to feel, why they feel the way they feel that it’s not a satisfying answer, right? Because you just have to live through it. [BLANK_AUDIO]


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Photo of Justin Harter

About JUSTIN HARTER

Justin has been around the Internet long enough to remember when people started saying “content is king”.

He has worked for some of Indiana’s largest companies, state government, taught college-level courses, and about 1.1M people see his work every year.

You’ll probably see him around Indianapolis on a bicycle.

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