Timing it Right
- Posted By Andrew Morgan
A new ownership or operator to any business or even a home for that matter brings with it a new level of enthusiasm. A want or urge to improve something, work hard on it and even just change it for the sake of change, to put one’s own touch to it. This can be said for a lot of other things in life as well, such as changing clubs/teams in sport or changing employment or receiving a promotion. Whenever starting something new we always start strong, but as time goes on the newness factor rubs off, sometimes quickly, sometimes it takes a while. Unless you are dedicated to something, it is hard to keep up a high intensity level.
Immediately after purchasing a business or more specifically a motel, it is expected that the new owner and or manager will be keen to get going on stamping their mark on the business and working hard to improve it. As the old saying goes, no one ever buys a business without intending to improve it. This means most likely long hours and a desire to build Rome in a day. But as time goes on, it is simply human nature for this motivation to reduce or diminish. It can simply be a progression of time or perhaps it is forced upon the people due to changing circumstances for health or relationship reasons or anything really that affects us in our lives. The result is we don’t work as hard as what we did initially, and we make changes to accommodate this. That may involve putting a manager in to operate the business or adding employees to take up the slack.
Everyone is different and for some people working hard until they cannot physically or mentally do it anymore, is just part of their make up. Others however may be more inclined when they know they have had enough, that it is time to get out, or make a change. Then there are those somewhere in between that find a happy balance and just work within that. The first mentioned may never or rarely take a holiday to recharge and that is fine for them. The other type may be on holidays much of the time and are happy to get out and retire as soon as possible. The latter will balance work and time off to be able to recharge and continue merrily along. It is not easy to put on a smile at a difficult time however operating a service-based business requires this. The more often that a guest is not greeted with a smile, is probably a sign that it is time for a change. Recognising this is no doubt the hardest part, however once accepted, it is time to reassess the situation going forward.
Businesses are bought and sold everyday and there are numerous reasons as to why any business is offered to the market for sale. It can be retirement, upscaling, downsizing, simplifying life, taking a capital gain, tiredness, burnout, changes in circumstances, health issues, etc. Often the reason is exhaustion. The business owner is in need of a break and has lost the enthusiasm to do those little extra things they once did. Losing that dedication or the energy to drive the business they once enjoyed doing. In a perfect world, preparing for sale needed to be considered well before now, not once the mindset has changed and moved on. The best financial decision-making position is when things are calm and not when they are based on highly emotive reasons or forced positions.
Excluding the odd customer, motels have a fairly regular timetable of activity. Busy until mid morning or even lunchtime, a lull during the middle of the day and then ramping up again for check ins later in the day. Utilising any down time where possible is a good way to manage one’s time and energy. Working oneself into the ground to try and save a dollar here or there is common place, but can’t be maintained over the long term. Those who operate their motel business and manage a lifestyle, can comfortably operate the same motel for decades. Longevity such as this in any business surely means they are doing something right and have a good work/lifestyle balance that suits them. Having a goal as far as length of tenure goes is a great idea, from a planning and management perspective, however is not always easy to achieve. Some may reach the goal and extend well beyond. Others may choose to opt out much sooner. Either way making that decision at the right or appropriate time is the key.
A strategy to prepare to take any business to the market is the ideal way to approach things. Many future sellers contact their Broker of choice at least a few months in advance of wanting to go to the market. The discussions should include what needs to be prepared, if any processes or operational matters need to be changed or fixed, allowing all involved time to have the correct information and data ready to attract genuine buyer interest. Deciding one day to sell and wanting it to be offered to the market the next is not ideal. It really is the case of getting the process right initially, rather than just shooting from the hip.
Not being in a position of “must sell” is going to assist in achieving the best result. It will also make the sale process a less stressful situation when one is not under pressure, by selling at the right time. If the seller is happy and the buyer is happy, it’s a win win situation!