Living in Denial

By: John Hotson,
Business Transition Alliance Co-Founder

The thinking that got us to where we are today isn’t the thinking that’s going to get us to where we need to be.

– Albert Einstein

Business owners who have survived the challenges and ups and downs of the business cycles of the last few years tend to be eternal optimists.

How else could you possibly soldier on, through what an outsider would view are incredible odds against success, if you didn’t possess a can-do attitude? That “we’ve been here before and somehow we will make this work!” philosophy is what carries many business owners through some long, dark periods over the life of their business.

But when does this optimistic mindset start to get in the way of reality?

For many it’s when the time has come to sell the business. That determined, optimistic state of mind is great to motivate staff, re-engage customers and calm nervous bankers, but it doesn’t translate at all to the balance sheet or business plan.

There comes a time when owners need to be able to sideline the team cheerleader (most often themselves) and bring the critically observant strategist off the bench to look at the business with a sense of objectivity that will attract a potential buyer.

Some owners move through this transition with ease. Perhaps the untapped possibilities for their business are just clear enough that a keen eye can see them, and the business gets scooped up for more than its book value. Unfortunately for others those opportunities are buried too deep, and the effort and investment that would be required by the buyer to bring them to the surface don’t translate realistically into what the owner believes should be considered as part of the current dollar value of their business.

These longer-term paybacks are realities that business owners need to recognize for what they are to a potential buyer – not opportunities where in their younger, highly energetic days they would have rallied the team and made to work – but rather a justification for those buyers to lower the offer, or in most cases look elsewhere for their investment opportunity.

Yet many owners get caught up in the very thing that made them successful – their optimism – which has now unfortunately transformed into denial. Granted it’s not easy to look at your business from the cold perspective of a dispassionate outsider. But without that insight the owner is likely to soldier on the way they always have while the opportunity to sell passes them by.

About John Hotson:

John is a seasoned marketing and communications professional and running addict. He has worked as both a business owner and advisor to owners who are committed to improving the value of their business. John is a principal of Clearwater Corporate Communications and a co-founder of The Business Transition Alliance.

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