In the first installment of this article series on how to sell your martial art school, I discussed the first two steps to selling, making sure it’s what you want and how to valuate your business.
In the second installment, I explained how to find a buyer and negotiate a price.
And in the third installment, I wrote about closing the sale, and common methods of financing used in selling a small business.
In today’s final installment of this article series on selling a martial arts school, I’m going to cover succession and post-planning. These are two areas that many small business owners forget about in their rush to find a buyer and close a deal to sell their business. However, they are incredibly important and should not be overlooked.
Succession Planning in Selling Your Martial Arts School
So just what is succession planning, and why do you need to do it? Succession planning is figuring out exactly how you’re going to hand the reins over to the person who is purchasing your school. Do it right, and you’ll set the buyer up for success in their new enterprise; do it wrong and you’ll doom them to rapid failure in business.
Succession planning takes into account the emotional and psychological impact of a change in ownership on the staff and customers of a particular business. As you can imagine, when a business changes ownership it can cause a great deal of stress, worry, and trepidation on the part of both the business’ staff and the clients, depending on how involved the owner is in the day-to-day business operations.
In some businesses, succession planning really isn’t much of an issue because the owner isn’t directly involved in running the business day-to-day. For example, many food service franchise owners rarely interact with their customers and staff, choosing to hire managers to run their restaurants so they can be free to focus on the bigger decisions in their business.
But in our industry the owner is also typically the operator, which means that you’re likely to have developed close relationships with your staff and clients over the years. And, the longer you’ve owned your school, the deeper those connections go. That’s why you need to plan ahead about how you’re going to gently sever those connections while gradually introducing the new owner to your clients and staff.
Handing the Baton Over Smoothly
In my experience, the absolute best way to do this is to sell your business to an existing staff member who is well-liked and well-known among your staff and clients. However, this isn’t always possible, which means you may have to spend some time planning how you’re going to introduce the new owner to your people.
In that case, the new owner should be willing to spend time working in the school while you’re still there. If he’s a serious buyer, then he will likely see this as an opportunity to gain more insight into the business before the sale, and he’ll also likely see it as insurance that the transition will go smoothly.
However, there are some things to consider before you just let some stranger walk out on your floor and start teaching classes for you. First, there’s the issue of confidentiality. What if the sale doesn’t go through? Will this person take all your trade secrets and then use them to compete directly with you? Or, will they share them with your competitors, or perhaps tell all your clients that you’re planning to sell your business, causing a potential mass exodus of clients?
Confidentiality is a must when selling a business, which is why both parties should sign a confidentiality agreement before negotiations ever commence. Even so, it may not be the wisest choice to let a potential buyer work in your school before you sell.
Instead, the better choice is for you to agree to stay on for a time after the sale is complete. That way you can be sure of the fact that the buyer won’t have the opportunity to inadvertently (or purposely) tank the business if the sale doesn’t go through. Instead, you can stay on and continue to act as the head instructor for a time while the new owner learns the ropes, and gradually allow her to begin taking over teaching responsibilities as the clients and staff become more comfortable with her presence.
Obviously, you’ll want to work out some remuneration for your time if this is the way you handle your succession of ownership. You’ll want to come to an amicable arrangement that is financially feasible for the new owner, but that also takes into consideration your time and effort in staying on after the sale.
Post-Planning: What to Do After You Sell Your Martial Art School
Post-planning for selling your martial art school is exactly that; planning what in the heck you’re going to do once the sale is complete. And believe me, you’ll want to have this worked out ahead of time.
For one, you’re going to have a lot of time on your hands, and what you may not realize is that going from working full-time in your own business to twiddling your thumbs all day is stressful, a lot more stressful than you might think. So, you’re going to want to plan ahead to make sure you have something to occupy your time and keep you from freaking out, getting hair plugs and a spray tan, and buying a red convertible Corvette (it happens – not to me, but it happens).
Not only that, but you’re going to want to hang on to as much money from the sale of your school as possible. Speaking with a good financial advisor and tax planner beforehand is of course essential for planning to that end, but also planning an income stream is an advisable strategy too. Chances are that you’re not going to end up with as much money as you think from the sale of your school, so you need to realize that the proceeds from the sale are not going to last forever. For this reason, you need to plan ahead and know how you’re going to support yourself after you sell your school.
One strategy might be to pay off your debt, pay down your mortgage, and thereby reduce your living expenses so you can live off your investments or real estate income and retire outright. Another strategy might be to start another business or find a job that allows you to work part-time. And another still might be to go back to school and start a new career entirely. Obviously, the options are endless, but if you don’t plan ahead of time you may end up squandering your money and wondering what the heck you’re going to do to pay your mortgage when it’s all gone.
Final Thoughts on Selling a Martial Art School
Selling a martial art school can be a bittersweet experience. On the one hand, alleviating yourself of the burdens of business ownership can open up a world of possibilities. But on the other hand, you’ll be leaving behind a business that made up the majority of your world for a good part of your life.
Even so, the best thing you can do for yourself and your students is to plan carefully and hire the right people to help you sell your martial art school. With careful planning, good advisors, and patience, you can rest assured that you did what was best for all the involved parties, and that your future is secure for whatever you may have planned.