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About failing quickly and preparing a company for sale

About failing quickly and preparing a company for sale

Protein pioneer Lizanne Falsetto founded the revolutionary nutrition bar think!® and is the current CEO and founder of better country food™.

Fail fast is a well-known expression that indicates the importance of accepting failure as a natural part of business and life. I learned early in my career that failure – how you approach it, learn from it and move on – is the key to success. Here’s what my failures (as well as my successes) have taught me about preparing a company for eventual sale.

Have a realistic timeline for your strategy.

The question is, how extensive of a strategy do you need, and how far in advance should it start? In research and from personal experience, I’ve found that it takes at least two years to get a business ready for sale. That’s a lot of hassle before you turn the keys. That may seem like overkill, but a two-year timeline gives you the schedule to get things right without being completely thrown off course by unexpected difficulties.

Build a full team.

The first step in your strategy should be to get a solid management team firmly in place. Believe me. You need them; never underestimate the value of building people around you who can guide your mission through critical functions.

For example, hire a great CFO to ensure data quality and availability, giving buyers the visibility needed to optimize your exit value. Finally, bring in a CEO to replace you so you can answer the follow-up question before it even gets asked.

Also partner with a financial group — a private equity firm, a growth stock investor, or a mezzanine borrower — with a level of sophistication that enforces your internal excellence. Make sure they are quality legal and financial advisors you can trust and preferably ones you have used before. I learned early on that a well-assembled team, rather than an individual mainstay, will always make you more prepared for success.

Time is everything.

Good timing in business is more than just following trends, turning your momentum dial to high, strengthening your brand’s foundation, or even having products in the pipeline; it’s also about good personal timing. Going through a divorce, mourning my father’s death, and raising two kids didn’t mix well with selling a business, so the business waited. Don’t make major transitions until your personal life can support the work it takes to close the deal.

Choose your buyer carefully.

I founded my company because of my passion for health. If all I had wanted was the money, there were much easier paths I could have taken. But I wanted to make a positive impact on the way people eat and live their lives and how our food affects the planet. Similarly, find ways to ensure your mission stays intact, even as you take your brand to another level.

Run your business where you live your life.

If you want a quality product, you can’t skimp – not on ingredients and not on your team. What I didn’t understand in 2004 was that I couldn’t cut back on the quality of my own life either.

I thought that turning my business and my family upside down by transferring the whole thing to Nevada’s favored tax climate was a good way to make more money from the future sale of the company. All parties involved suffered and this in turn had a negative impact on the future success of my business. Eventually, I moved the company back to California, where our people and I felt at home.

Follow the route of the non-process process.

I am a straightforward person; my life is an open book. But I learned the hard way that there are times when it’s better to keep that book closed. In 2004 I informed my employees of my plans to sell the company.

They were rightly concerned about the change and concerned about their jobs, and this change in morale eroded the company’s strength. In 2015 I took a different approach and kept the nest undisturbed. I didn’t put the burden on everyone by sharing the uncertainty of what was yet to be done. As they continued as a carefree team, their strength shone and they were able to stay on after the transition.

If you’ve tried to sell your business and failed, congratulations; now you have a better knowledge base on how to do it successfully next time. Just take a moment (or even a few years) to record everything you’ve learned and reposition it for a successful second maneuver.

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