Let’s examine the secrets of a successful sale. Last September in Fresno, California, Stan and Shelly Grosz finalized the sale of Horn Photo to Teamshares. Teamshares purchases successful small businesses. It then brings in a business-savvy president with the long-term goal to sell 80% of the business to the employees. Initially, the employee team received 10% of Horn Photo.
“We operated the business every day with our usual passion and investment. We didn’t slow down our involvement in IPI, PRO or anything else,” Shelly reflected on the process of converting Horn Photo to employee owned through Teamshares. “Yes, we were ready to retire, but we couldn’t let up on our commitment to the business. We had to keep working to keep the business viable and interesting to our customers, employees as well as potential buyers.”
“When Teamshares took over,” Stan added, “we had great employee engagement. Teamshares got better engagement.”
Teamshares recruited Keegan Witte to be the new president as an employee of Horn Photo. Shelly was amazed with Keegan’s skill set. “I struggled to get information from our computer system. Within a few hours Keegan got more information, faster. It instantly let us make better inventory decisions.”
Stan also noted, “There were problems we never solved because they weren’t critical in our mind. Keegan, with his experience in larger businesses, was able to help the team focus and resolve some of those issues.”
A New Growth Mindset
Keegan came to Horn Photo with experience in banking, real estate as well as home construction. He has depth in IT and computer systems.
Keegan observed, “In small businesses, the owners are experts in the industry. My experience with larger corporations enables me to bring a new growth mindset. My IT background is also helpful. It allowed me to accelerate and improve some Horn Photo processes to create more capacity for the team on other priorities and new initiatives.”
A long-standing Fresno resident, Keegan was a photo hobbyist prior to taking over the role of president at Horn Photo.
“As a customer myself, I wasn’t using all the valuable products and services Horn Photo has to offer. I look at the business through that lens. Stan and Shelly did a wonderful job of building awareness. We’re also going to continue to grow it to help the Fresno community treasure their memories and relive those experiences with what Horn Photo services can do with those images.
“We’ll also remind our community that Horn Photo is owned by the team you meet in the store. We’re not an impersonal corporation. We’re a locally owned small business, here to listen and help.”
Secrets of a Successful Sale
The challenge of transitioning ownership among baby boomers is reaching critical mass. If you don’t have family interested in taking over the business, what’s better than selling it in a way that allows your “company family” to become the eventual owners?
Teamshares is a company with a mission to build and shift $10 billion of wealth to employee owners. It is looking to help other small businesses become employee-owned after the owner’s retirement. Consequently, it will ensure those businesses will live on for decades to come.
Teamshare’s requirements include the following:
- A U.S. based business
- Retirement sale. Their preference is to work with one retiring owner. (They may consider two.)
- The owner must be open to a transition, at mutually agreeable compensation, for six months or less.
- Two or more store managers will remain after the sale.
- Over $400K Seller Discretionary Earnings
- Tax-return provable financials
Stan reflected on the significant lessons he learned from selling the business. Here are his insights:
- Retail is “location, location, location.” Get your landlord to assign the lease to the buyer for a few years. Stan and Shelly kept their personal guarantee on the lease to facilitate the assignment.
- Be sure to identify early anything unique, like outstanding gift cards, ownership in buying groups, related party transactions as well as other financial commitments necessary for the continuation of the business.
- A car offered for sale is washed and detailed. Clean up your business. Make it spotless and efficient for both your customers and potential buyers.
- Buyers don’t want to get into nepotism battles. They’ll flee before fighting family. Separate early from family who aren’t high producers.
Stan also checked out various business brokers. He says it’s critical to use an objective broker who has your interests at heart. It’s difficult for the seller to remain objective and not take the buyer’s concerns as criticism. It’s as if the seller is putting their child up for adoption and can’t bear to hear it has major defects. Every child has ugly spots. An objective broker can usually overcome those issues without emotion. It’s hard for the seller to do that.
Finally, by constantly striving to keep Horn Photo customers and employees successful, Stan and Shelly deserve a happy and joyous “retirement.” They’ve launched their next venture—Orchards in the Fresno area, where they will spend more time with their grandkids. Congratulations, Shelly and Stan!